Taking Risks Template

Use this chart to take notes from the lesson. You may also research from outside sources; however, be sure to
cite these in MLA format. You must choose three different investments, one from each risk level (high,
moderate, and low). Then, respond to the questions in part two.

Part One—Review the Investment Types

Type of Explain what the Explain the level of Provide a real- Discuss how taxes, fees,
Investment investment is and risk and potential world example of and inflation could
how it works. return on this investment. positively or negatively
investment. impact this investment
and how.

Investment It is a certificate It is a low risk You want to Due to how inflation may
Choice #1 used by the bank investment option increase your be the $500 dollars you
that is issued to since all you have money with little to put in at one point may
someone who is to do is deposit a no risk so you be worth less by the time
depositing money certain amount of depasit %500 your withdraw that
CD for a specific money into the dollars for a deposit. Not to mention if
amount of time. bank and simply certificate of there is a tax bracket
wait. You will also deposit and then update for your specific
have a 2% interest you will have to bracket some money will
rate. wait and that be of that removed due to
money. will have taxes.
increased due to
the 2% Interest
rate.
Investment It is when you This is a medium Paying $550,000 It may cause housing to
Choice #2 purchase a risk investment dollars for a become extremely
property for a since it mostly property and then expensive and narrowing
certain amount of depends on how investing $45,000 the possible buyers for
money and then the housing market in home those types of
Real Estate after Investing is and whether improvements and property exponentially.
more money in properties are renovations making
renovations and extremely its value at around
refurbishments you expensive even 595,000. However,
resell the house at without the increasing the price
a higher price renovations which more so there is
earning a profit. in turn makes it profit to be made
more expensive for and then
the consumer wondering who is
ending in fewer going to buy that
possible people to RV at such a high
buy the property. price.
Investment Stocks are a high You spend $300 Depending on how to
Choice #3 risk, high reward Doing this type of dollars in 2002 on stock market is in play
type of investment investment is like bitcoin then a few and how the affects of
 since it is akin to putting bets on a years later your inflation may have on wall
Stocks gambling company to do well forget about those street may cause massive
and then waiting shares and never selling frenzies causing
and once it is at a sell them. Then stock prices to plummet
higher price then during the late
before you sell your 2010s bitcoin prices
shares earning you skyrocket and your
more money then $300 investment
what you spent multiplied into 3.3
However, you could million dollars but
also spent high you had to wait
amounts of money over 15 years.
and then the
market seems to
get worse a worse
and you cut your
losses and sell your
shares for less than
what you bought.

Part Two—Select and Explain Your Investment Plan

Imagine you win $10,000 in a state competition and decide to invest your prize. First, determine your risk
tolerance. Then, choose two investment options from the lesson for your money. Describe your investment
plan in a detailed paragraph. Be sure to include responses to the following questions:

• Why did you choose these two options?

• How may taxes, fees, and inflation affect your investments?

• How do your choices reflect your tolerance for risk?

• How do you plan to divide your money between the two investment options you chose? Be sure to
include the following terms in your explanation:

• diversification

• risk

• rate of return

• interest rate

I have chosen a combination of two investment options: a low-risk, low-return investment in government
bonds and a moderate-risk, moderate-return investment in a diversified index fund. I opted for government
bonds due to their stability and guaranteed returns, reflecting my risk tolerance and desire for a secure
investment. On the other hand, the diversified index fund offers a balance between risk and return, providing
potential growth while spreading out risk through diversification. Taxes can reduce my overall returns, so I will
need to consider tax-efficient investment strategies. Fees associated with managing the index fund can eat into
my returns over time, so I will look for low-cost options. Inflation can erode the purchasing power of my
returns, emphasizing the need for investments that outpace inflation rates. Diversification is crucial in my
investment plan to spread risk across different asset classes and minimize the impact of market fluctuations. By
dividing my money between government bonds and an index fund, I aim to balance safety and growth
potential.