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26 Cards in this Set
- Front
- Back
How is investing different to saving ? |
Investing is using money to make more money and saving is just keeping the money |
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Explain how capital gain is different to capital loss |
capital gain is when the sale price is more than the initial cost and capital loss is when the sale price is less than the initial cost. |
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What is an investment portfolio? |
An investment portfolio is the range of investments held by an individual |
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What is the minimum amount of money required to begin an investment portfolio? |
$500 |
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Why is property a difficult market to enter? |
It is expensive to afford with just your savings. |
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Gearing is also known as leveraging. Define this term. |
Borrowing for the purpose of investment, such as purchasing a share portfolio or 'using a mortgage' to purchase a house |
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What is negative gearing? |
Income gained is less than repayments |
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What are the advantages of negative gearing? |
- purchase an asset that may increase over time - reduces the amount of tax you have to pay - helps promote national growth |
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List some disadvantages of negative gearing |
- asset could fall in value - interest rates could increase - the loss you need to make to reduce your tax has to be funded out of your other sources of income |
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Define ethical investing |
Investing in assets that are considered to be morally sound- those that are not socially or environmentally sound |
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Distinguish between positive screening and negative screening |
Negative- not investing in particular companies because they are unethical and positive is investing in socially or ethically responsible companies. |
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List the four investment options |
- cash - fixed- interest - property - shares |
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What are the advantages of cash? |
- easy access - can put in a cash investment account |
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List the disadvantages of cash |
- not a good way to make money - easy to rob |
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What is fixed-interest? |
Agreements to pay a certain amount of mine on a fixed date. |
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What are two advantages of fixed-interest |
- higher the interest rate, the lower the price - bonds can be sold before the end of an investment term. |
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What are some disadvantages of fixed-interest? |
The market is volatile |
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What are the advantages of investing in property? |
- actual object rather than piece of paper - investor has more control |
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What are the risks of investing in property? |
- bad tenants - no tenants |
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What are shares? |
Part ownership of a company |
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What are the advantages of buying shares? |
- get paid through dividends - capital gain |
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What are the disadvantages of investing in shares? |
- share markets can be volatile - economic recessions |
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Risk and return diagram |
Back (Definition) |
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Explain how diversification can reduce overall risk in investing |
Investor can invest in a variety of investment types and in various investments. Improves rate of returns in the long run. |
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What is the All Ordinaries Index? |
A measurement of the average movements in the share prices of a selection of major Australian companies. |
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Three main factors of investing |
- goals of investor - time period being considered for investments - risk tolerance of investor |