Market Analysis

Finance Goals

My client has financial goals for the short term that will benefit her in the long term goals. My client came to me and told me she wants to start investing in her future. She wants to be able to pay for her children's college and make sure they are financially set after she is gone. So we listed her financial goals as short term investing money for retirement and children's college. An intermediate goal is pay for the children's college and long term is having the money to be financial stable when she retires. For my client do be able to do this we have to discuss different investment types and the risk and returns of the investments.

Risk and Return

There are different risks and returns on all investment types. The three investment types I feel are going to be best for my client are stocks, certificates of deposit (CDS), and commercial bonds. Seeing how all these have different risks and different interest rates attached to them makes the chances of reaching the long term goals better. With stocks there are risks of the stock market falling, the company you are invested in going bankrupted, and losing all your money. But the return on stocks can be more rewarding than the other two types because your investment over the years ends up earning 10% because that has been the average in the stock market for years and even with the recent stock market crash it is still coming back with a 10% rate of return.

CDS are a safer way to invest your money and would be better to do for the college funds that the client wants to have. The risks on CDS is they do not have a high rate of return and you rate of return involves the economy and how it is doing. Another risk is using a large sum of money in CDS not knowing if you will be able to have a return you are looking for. Returns are CDS are backed by the government making it where you do not lose your money as long as you let the CD sit till the end of the term. It is a safe investment with low return. Commercial bonds are bonds that you get from a company or government with the promise of repayment plus interest at the end of the stated time. Commercial bonds are like CDS with the same risk and returns but they can earn more interest and is guaranteed to get the investment plus the interest back. Now we will look at the financial environment.

Financial environment

The financial environment regarding economic situations is in an upswing since the stock market crash a few years ago. The unemployment rate is still high but it projected to go down in the next few years. The interest rates are low meaning the rate of return on CDS and bonds are going to be small. The stock market is still averaging a ten percent return rate. Knowing this is going to help decide the best investment options. With the economy predicting the worse is over means it is a