Describe three ways you will invest in your future based on the principles of finance discussed in this course.

Investing for my future | Business & Finance homework help

 

An Emergency Fund will be one way I invest in my own future. It should be sufficient to cover all expenses for six months, including rent, housing, insurance premiums and transport costs. A financial emergency fund can provide financial protection in the event of job loss or illness, as well as financial relief for any unexpected financial hardships. This type of account can be built by starting with a small amount every month, increasing it gradually until you are able to save enough for your immediate needs. Having an emergency fund can help ensure that personal financial problems don’t become overwhelming during difficult times.

Diversifying my portfolio through portfolio management can help me invest in my future. Because diversification involves investing in multiple asset classes, it spreads out the risk. No single security or asset class dominates the portfolio. Instead, each asset contributes to the total return on investment. Portfolio management attempts to maximize long-term return while minimizing risk by using tools like Modern Portfolio Theory (MPT) and William Sharpe’s CAPM equation to determine optimal allocations within a given portfolio structure. This equation takes into consideration factors like expected returns and volatility, as well as the correlation of assets. It then determines which securities should either be purchased or sold.

Third, I intend to invest through retirement planning strategies like ULIPSs or NPSs. Market-linked investments such as ULIPs have features that are similar to mutual funds, but also offer additional benefits such as life insurance. If one puts Rs 50000 each year into a ULIP, with an 8.5% annual growth rate, he will accumulate Rs 4 Crore over the 25-year tenure. Similarly National Pension System (NPS), allows people who enroll maximum percentage their salary towards retirement savings However unlike traditional pension schemes where employee receives lump sum amount maturity NPS gives annuity monthly income retired individuals Though choice ULIP VS NPS depends on features offered budget preferences both excellent options build secure future financially  (Kashyap Krishnan Kaur Ghai 2019 ).

Of all three investing methods discussed here , I feel most confident about diversifying investments since importance having well balanced varied basket holdings clear making sure part savings protected many types risks associated markets important step becoming successful investor particular regard do believe choosing appropriate portfolio challenging require knowledge strategy This involves understanding clients goals objectives constructing model consisting different components based individual requirements even assessing likelihood every scenario remains objective  Additionally trying figure how changes proposed regulations legislation affect outcomes Additionally need remain vigilant monitor constantly changing dynamics market impossible know exactly what happen tomorrow could significantly alter outlook Thus decide use suitable tools sources keep abreast developments fully investigate implications Each areas requires extensive level dedication research commitment this actually most formidable yet succeeding pave path sustainable wealth accumulation  ( da Silva Joao Saldanha Portela 2019 ).

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