Three Investments: Savings Accounts, Real Estate, and Collectables

1. Choose, define, and research an investment option. Provide details, including annual interest rates or average rates of return. A savings account is a kind of deposit account that banks and credit unions provide. It is a low-risk investment choice that is appropriate for people who wish to receive interest on their savings while having their money conveniently available. In the United States, the average interest rate on a savings account is now roughly 0.05% per year; however, this might vary based on the bank or credit union and the kind of account.

2. Determine the pros and cons of choosing these investments. Advantages: Savings accounts are a secure investment option as they are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000. You can access your money anytime without penalty because they are very liquid. Negative point: Savings accounts usually have low interest rates, which means the profits are not very significant. Sometimes, the rate of inflation can be more than what you earn from a savings account. This can cause your money to decrease in value as time passes.

3. What are the things you need to continue to learn about this investment in order to feel more comfortable with it? Interest rates: Compare savings account interest rates among banks and credit unions. Learn about high-yield and money market savings accounts. Inflation can affect the value of your savings over time, so it's important to keep that in mind. To make sure your savings keep up with inflation, you can check historical inflation rates and compare them to the interest rate of your savings account.

4. Determine the risks associated with your choices. Savings accounts are a safe way to invest your money. They are usually protected by the government for a specific amount. Savings accounts usually have low returns and may not keep up with inflation. Some savings accounts may charge fees or penalties if you withdraw money early. Real estate can be risky because its value can change depending on the market and the economy. Investing in real estate requires a lot of money at the beginning, and you'll also have to pay for things like upkeep and property taxes. Real estate investments can be hard to sell quickly if necessary, which is known as being illiquid. Collectibles can be risky to invest in because their value is subjective and can change based on trends or fads. It can be hard to sell collectibles, and it might take a lot of time and effort to find a buyer. Collectibles can get damaged or lost, which means you could lose all the money you invested in them.

5. What percentage of your money would you invest in each of your three chosen investments? Explain your reasons. Savings accounts are a safe way to invest your money, but they usually don't give high returns. Keeping emergency funds or short-term savings goals is a good option. I would consider putting 10-15% of my investment into a savings account. Collectibles are risky investments that can offer high rewards. However, their value is subject to market trends and fads, and it can be hard to find someone to buy them. To reduce risk, it's safer if I invest only 5-10% Investing in real estate can be risky, but it also has the potential for high rewards in the long run. But it costs a lot of money at the beginning, and you have to keep paying for things like repairs, taxes, and other expenses. I would consider putting 20-30% of my investments into real estate.

Part 2: Calculating Returns (Application)

6. Choose one of your three investments and determine the following using calculator.net/investment-calculator (including a screenshot of your calculations):

a) Your ROI if you invest $1,000 at one time compounded monthly after 20 years. For a bonus mark, calculate this using the formula you learned in the lesson. Make sure to show your work.

b) Determine how much you need to invest today to have enough money to purchase something you love or want 5 years from now.

c) Assume you invest $100 a month for 25 years, How much money would it be?

Based on the information provided, solve 6abc for me. Thanks!