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Investment Options Overview

Created by

@SensibleSweetPea

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Questions and Answers

Which factors primarily determine the risk of fixed property investment?

The condition and location of the property (correct)

Market demand and seasonal trends

The age of the property and community reputation

The investor's financial history and interest rates

What is a notable disadvantage of investing in collectibles?

They require a substantial initial investment

They do not provide regular income to the investor (correct)

They are highly volatile in nature

Their value is solely determined by market trends

How can damage to a collectible impact its financial value?

It increases its rarity, thereby increasing value

It has no impact on its value

It only affects its sentimental value

It significantly reduces its value (correct)

What is a common characteristic of fixed deposits in terms of capital access?

Funds can only be accessed upon maturity or under specific conditions Signup and view all the answers

What happens to the interest rate on a fixed deposit if the prime rate changes?

It might change depending on the terms agreed with the bank Signup and view all the answers

What is the typical time frame for money market accounts?

Short-term, ranging up to one year Signup and view all the answers

What is a common feature of returns on money market accounts?

They often have lower interest rates compared to other options Signup and view all the answers

Regarding the liquidity of investments, how do money market accounts compare to collectibles?

Money market accounts are more liquid than collectibles Signup and view all the answers

What is a potential consequence of investing in fixed deposits during periods of high inflation?

Returns may be challenging to achieve that exceed inflation Signup and view all the answers

What can influence the appreciation of a collectible over time?

Increased artistic recognition or 'discovery' of a piece Signup and view all the answers

Study Notes

Investment Options

Money Market Accounts:
- Short-term investment accounts
- Easy access to funds
- Liquid
- Lower interest rate than other savings options
- High liquidity
- Example: Call accounts
- Can be held indefinitely
- 32-day period (for example)

Fixed Deposits

Description:
- Invests fixed amount for fixed time
- Interest rate can be fixed or variable
- Long-term investment
- Funds received only at maturity or death of investor
- Penalty for early withdrawal
Risk:
- Bank liquidation (rare) is a slight risk
- Low overall risk
Return:
- Interest rates vary between banks
- Higher interest rates for longer terms and larger amounts
- May not offset inflation (cumulative interest)
- Possible capital growth via reinvestment of interest

Collectibles

Description:
- Antiques, coins, artwork, stamps
- Market understanding crucial for investment
- Limited South African market versus international
- Technology improving accessibility to market
Risk:
- Damage diminishes value
- Requires expert knowledge
Return:
- Value increase potential with no damage
- No monthly income
- Volatility is low
- Potential for profit from low-cost buys of valuable items

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Description

This quiz explores various investment options, including money market accounts, fixed deposits, and collectibles. Understand the features, risks, and returns associated with each investment type to enhance your financial literacy. Test your knowledge and discover which investment might be best for you.