Question

Hey everyone! Need some help with economics please :)

Answer 1

So basically, I need to know these things about bonds, mutual funds, and futures
diversification
risk
rate of return
interest rate

Answer 2

But the issue is, I'm not really sure what all that means :(

Answer 3

I know that futures are definitely high risk, mutual funds can be low to high risk, and I think bonds are about medium risk

Answer 4

the higher the risk, the greater is the rate of return

Answer 5

suppose you have $100 with you and you want to invest it

Answer 6

would you choose to invest it in bonds, mutual funds, or futures ?

Answer 7

Probably..... mutual funds

Answer 8

Actually, futures

Answer 9

you could do that, but there is still a much better way to invest

Answer 10

How old are you ?

Answer 11

she is 16

Answer 12

so you can take risks

Answer 13

you're not retiring in near future

Answer 14

so if something goes wrong with your investments, you can handle it, its not the end of world for you

Answer 15

correct

Answer 16

since you're just 16, here is how you should invest :

70% in high risk (high returns)
20% in medium risk (medium returns)
10% in low risk (low returns)

Answer 17

that is called diversification

Answer 18

you're diversifying your investments based on your risk taking/handling capacity

Answer 19

putting all money at high risk is not a wise thing

Answer 20

Okay, that makes sense

Answer 21

similarly putting all money at low risk, low earning is also not a wise thing

Answer 22

you must always diversify your investments

Answer 23

How would interest rate come into this?