Chapter 6, Problem 17AA

To determine

To evaluate:factors that should be considered while deciding how much to save in which plan.

Explanation of Solution

Factors that should be considered while deciding how much to save in which plan are:

1. Keeping the money fairly secure if they need it early, if they are near to retirement, only as they 're about to quit, they wouldn't want their assets down in value. Therefore, if they have a near-fiscal target, it makes sense to invest in less costly instruments. Investment in bonds is largely acceptable here. Bonds are secure devices.
2. Taking medium risk with their capital for better appreciation, if they can afford to take a little risk with their capital because they won't need it soon, then purchasing an investment like a mix of very stable corporate stocks that pay dividend (income) and corporate stocks that don't pay dividend but reinvest their profits in the future is a good option for them.
3. Taking extreme risks for larger returns if they can afford to take a risk to higher gains with their capital, then their target should be growth. They should invest in companies' stocks that will plow their profits back into their future. It is acceptable if they are willing to maintain their investment for a long time, as it takes time for certain businesses to raise their value dramatically.

Economics Concept Introduction

Introduction: Banking can be described as the business practice of taking and safeguarding money owned by other individuals and institutions, and then loaning it out to earn a profit. Nevertheless, the activities covered by the banking sector have expanded with the passage of time, and banks are now also providing numerous other services.