Investing Money

Topics: Foreign exchange market, Exchange rate, Central bank Pages: 7 (2127 words) Published: April 1, 2014
Investments are the basic roots of every economy market there is. With the growing economy one of the most common and effect ways is investment. Using the right techniques and following the trend closely, there will be minimal losses and major profit gain. The ideal investment is one with no risks and high profits, which is almost quite impossible to have. In this report, the risks, factors, probability is calculated for Alan and from that an investment plan is draw up to ensure the best possible outcome of Alan’s investments. Leaving money in the bank to appreciate over the years by the bank’s interest rate is not the most common way investors use to let their money grow because there is very little profit made, but at the same time it is the most safest way of investment. Investors do put their money in a bank, but they don’t rely much on the bank’s interest to earn more since the interest rate is about 0.37% and the highest being 0.7%. There advantages of leaving your money in the bank:

1. No Losses
Putting your money in the bank is not a trade. With the interest rate that the bank offers, your money would increase. 2. Insurance
Banks provides insurance. This means that the amount of money that you deposit will be secure even when the bank is in trouble Putting your money in a savings account (bank) ensures that none of your money would be lost. But there are drawbacks with putting your money in a savings account (banks): 1. Minimum balance

A certain amount of money is needed to be in the account to ensure that the account would still be valid. If not, the bank you require you to pay a fee, and depending on which bank the money would vary. 2. Low Interest rates

Banks offers the lowest interest rates, as low as 0.0010% (HSBC interest rate) and only a certain amount of money has to be put in to obtain a certain amount of interest.

If you want your money to make money, a saving account or simply just leaving it in the bank won’t suffice because of low interest rates, but your money would be secured. In Hong Kong, banks offer simple and compound interest depending on which saving plan you chose. And depending on different savings plan they would have different interest rates. For standard charted, a deposit account interest rate is 0.7%, which is the highest interest rate in Hong Kong and is 0.33% higher than the average 0.37% which would be paid annually depending on the money in the bank at the end of each year. This is good for your investment, since you money is relatively growing larger with simple interest. Using foreign currency investment as a way of trade is accompanied with high risks and might not be suitable with everyone. Before deciding to invest in foreign currency, you should consider about your aim, your degree of experience in the field, and how much risk you would allow. Foreign currency investment has a longer-term outcome compared to forex trading. Foreign currency investment depends on the market, which means that you can either gain a lot or lose a lot. There are two main advantages of foreign currency investment: 1. Large and liquid market

The foreign exchange market is one of the most biggest and popular markets due to its flexibility and small investments are allowed as well. The foreign exchange market is much more easier to analysis. 2. Diversification

Spread your investments which increases market transacts. This also helps investors to avoid potential risks, reducing the risk of losing money by investing in a range of assets (bonds, stocks etc.) There are also disadvantages to foreign currency investment: 1. High leverage

Since the foreign currency market moves on very small increments, investors need to margin (borrowed capital) to increase the chance of profit from the investment. 2. High volatility
High risks due to social, economical, governmental factors. Foreign currency investment depends on the supply and demand of the country currency, which is unstable. The...

Citations: (Bergen, Investopedia n.d.) (Bergen, Investopedia n.d.) (Budgeting Income n.d.) (Currency strength and weakness n.d.) (Fox Business n.d.) (HSBC n.d.) (Hong Kong Bank Rates n.d.) (Investopedia n.d.) (Kuepper n.d.) (Lein n.d.) (Mckeating n.d.) (New Jersey Financial Counseling n.d.) (Online Forex Trading and Broker Comparsion n.d.) (Seabury n.d.) (Sheridan 2013) (XE n.d.) (Stephen D. Simpson n.d.)
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