Short term investments have an important role to play in personal financial management. Briefly discuss two advantages and two disadvantages of short-term investments as part of an investor portfolio.

Your friend was hoping to make money investing in well-known companies shares that he thinks are going to outperform the market. He buys and sells shares on a very frequent basis. Unfortunately, since he began following this approach, he has lost 20% of his money. You suggest to your friend that he may be better off if he invests in an Exchange Traded index fund. Required: Explain what an Exchange Traded index fund is. Discuss two reasons why an investment in an Exchange Traded index fund is better than the approach your friend has previously followed.