Chapter P4, Problem 2RQ

To determine

Four types of mainstream investments

Explanation of Solution

Four mainstream investments are as follows:

1. Growth investments: These investments are helpful for investors for a long time period as they need to stand with the ups and downs in the market to grow in the future. These investments involve shares and property.
People can buy or own shares where prices can be varied from one day to another. This investment can deliver higher returns in the future but it is the riskiest investment.

People can invest to buy property because the prices of properties can rise over a long-term period where they can get a higher return but this investment needs large funds.

2. Defensive investments: these investments provide consistent income and there is a lower risk as compared to growth from the investment.
3. Cash investments: these investments consider daily deposits such as depositing in a bank account where the return is quite low but it provides a regular return.
4. Fixed interest investments: These investments include bonds which also provide lower potential returns on investments and lower risk as compared to growth investments.

Economics Concept Introduction

Introduction: People use the money for different purposes. Some people invest money from where they can get higher profits in the future and some save money for their future needs. Every investment involves different types of risks and benefits.