Advantages And Disadvantages Of Michael's Second Investment Choice

Decent Essays
The first investment choice Michael wishes to have is shares purchased at the Australian Stock Exchange. Some of the advantages of shares purchased at the Australian Stock Exchange include capital growth, which takes place when the price of one’s share expands. It builds the investors’ wealth as well as protects them from inflation, the increase in price and the decrease in the purchase amount. Also, another benefit of shares purchased at the Australian Stock Exchange is its flexibility and control. Specifically, the control that buying and selling reasonable amounts gives to the investor, for example, saving a bit of money. However, a couple main disadvantages of shares purchased at the Australian Stock Exchange include volatility risk. This is when investors experience their shares fluctuating rapidly by as much as 50% every year. Another disadvantage would be the risk of capital loss. The investments people make in the share-markets are not necessarily guaranteed. Therefore, if a company is not performing well, it would be hard to come across a client for one’s shares at the price he/she would want to sell them at. Because of this, the selling price of one’s investing could be substantially lower than its initial purchase price. Michael’s second investment choice is…show more content…
Because of the professional assistance provided by the executives for the investors, fees are charged in a multitude of ways. For example, some fees could be paid as a fixed percentage of the value of the investment, so that when the investment amount grows the fee also increases. The final major disadvantage of managed funds is the fact that the performance is not guaranteed. Despite the fact that the investor’s investment is in a professional’s hands, it doesn't necessarily mean that his/her money is safe. For example, in a substandard market cycle, these skilful managers will still have the risk of losing
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