Real Estate Investment

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Questions and Answers

What are the advantages of investing in real estate?

  • Low capital needed and easy financing
  • Requires minimal maintenance and preserves value well
  • High liquidity and easy to sell
  • Low correlation with other asset classes and can generate rental income (correct)

What are the disadvantages of investing in commodities?

  • Easy to invest directly without additional costs
  • Impractical to store and transport (correct)
  • Natural safeguards against inflation
  • Associated negatively with equities and bonds

What are the disadvantages of investing in real estate?

  • Easy financing and low capital needed
  • Low liquidity and difficult to sell (correct)
  • Requires minimal maintenance and preserves value well
  • Has high correlations with other asset classes

What is insurance?

<p>A contract that provides financial protection or reimbursement against losses from an insurance company (C)</p> Signup and view all the answers

What are the advantages of having insurance?

<p>Provides financial protection against unforeseen circumstances (B)</p> Signup and view all the answers

What are the disadvantages of traditional insurance plans?

<p>No sickness/death until a certain age may mean not getting any benefits at all (D)</p> Signup and view all the answers

What is the definition of insurance?

<p>A contract in which an individual or entity receives financial protection or reimbursement against losses from an insurance company (B)</p> Signup and view all the answers

What are some advantages of having insurance?

<p>Insurance provides financial protection against unforeseen events (C)</p> Signup and view all the answers

What are some disadvantages of traditional insurance plans?

<p>No sickness/death until a certain age may mean not getting any benefits at all (B)</p> Signup and view all the answers

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Study Notes

Investing in Real Estate

  • Provides a tangible asset with potential long-term appreciation in value
  • Can generate passive income through rental properties
  • Offers tax benefits like deductions on mortgage interest and property taxes
  • Allows for diversification of investment portfolio

Investing in Commodities

  • Market fluctuations can result in significant losses
  • Requires significant capital for investment
  • Storage and maintenance costs for physical commodities
  • Prices can be affected by factors beyond investor control

Disadvantages of Investing in Real Estate

  • High upfront costs for property purchase and maintenance
  • Illiquid asset, making it difficult to quickly sell
  • Property market fluctuations can affect value
  • Ongoing management and maintenance responsibilities

Insurance

Definition of Insurance

  • A financial protection plan against unforeseen events or risks
  • Transfers risk from individual to insurance provider in exchange for premium

Advantages of Having Insurance

  • Provides financial security and peace of mind
  • Protects against unexpected medical or repair expenses
  • Can provide income replacement in case of disability or death
  • Offers liability coverage for unforeseen events

Disadvantages of Traditional Insurance Plans

  • Premium costs can be high and inflexible
  • May have limited coverage or exclusions
  • Can have complex policy terms and conditions
  • May have administrative and claims processing issues

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