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 Post subject: Hard choice of investing - high rate of earnings or low risk
PostPosted: Wed Apr 03, 2013 8:34 am 

Joined: Wed Mar 06, 2013 11:04 am
Posts: 1
Hello to all.
I have a difficult problem and want to ask what would you do if be in my place.

I have a small amount of money (30 000 $) and decide to reinvest them. There are two acceptable variants of investing:

For the first variant with low risk i have 6 p.a. percent rate so at the end of year i will have 31800 $. Profit is guaranteed.

For the second there are 15-16 p.a. percent rate so after one year i will have 34800 $.
Pros: higher level of income (it can used as periodical income)
Cons: this investment is made in different currency (not USD) so as result of devaluation final profit can be less than expected.

For your opinion, which variant of investing is preferable?


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 Post subject: Re: Hard choice of investing - high rate of earnings or low
PostPosted: Sat Jun 15, 2013 9:43 am 

Joined: Sun Aug 08, 2010 12:56 pm
Posts: 6
Location: san francisco bay area
This question is apt in this low market interest rate environment. Look at how much risk you are personally willing to accept. Also consider the future uses for this cash. If you need the money for something specific within the next 5 years, then be conserviative. Currency risk can wipe out all of your profits and is much more speculative. You need to determine whether the potential loss due to the exchange rate is worth the potential gain to you.


Last edited by Barb Friedberg on Sat Jun 15, 2013 1:51 pm, edited 1 time in total.

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 Post subject: Re: Hard choice of investing - high rate of earnings or low
PostPosted: Sat Jun 15, 2013 9:50 am 
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Joined: Wed Sep 23, 2009 9:01 am
Posts: 5395
There is really no way to answer this without specifying the asset classes and quantifying the risk.


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 Post subject: Re: Hard choice of investing - high rate of earnings or low
PostPosted: Tue Jun 18, 2013 9:05 am 
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Joined: Sat May 25, 2013 11:21 am
Posts: 53
Location: San Diego, CA
Quote:
Look at how much risk you are personally willing to accept.

I agree. It's hard to give you a recommendation without knowing more about your financial situation and your goals. Is this money you will need in the short-term? Or is it a longer-term investment? What is your personal preference for risk tolerance?

If you need more guidance, you can read http://dreamscashtrue.com/portfolio-planning-risk-tolerance/ to help you determine an appropriate level of risk.

_________________
Dreams Cash True - Achieving the Dream of Financial Freedom
www.DreamsCashTrue.com


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