Money Management Essay Example | Topics and Well Written Essays - 3000 words

Money Management - Essay ExampleInvesting with exchange traded money ETFs is an easy way to ensure diversification in any portfolio involving stock, bonds and commodities without having to invest in the individual shares, bonds and commodities themselves. They change investors to access sectors that would not be available to individual investors (Morningstar 2014b). This takes some of the hassle out of investing.I am very adventurous and I tend to have a liking for the sea. Therefore, my aim is to own a yacht within the next seven (7) years. In order to achieve this specific goal I will be making some medium to long term investments so that I rump make a substantial deposit on a new yacht in volt (5) to seven (7) years time. The yacht is expected to cost in the range of 300,000 to 500,000 by the time I get to the point where I am able to make a substantial down payment.My pretend tolerance is medium and so I am willing to take a moderate direct of fortune in order to achieve a favourable return on my investment. Costa (2011) indicates that the returns that I would achieve are proportional to the risk taken and so I expect moderate returns. My risk profile is consistent with a balanced profile. A balanced allocation has between 0% and 25% cash 40% to 70% bonds and 30% to 60% stocks (Costa 2011). This portfolio is characterised by limited risk however, it can free obtain good returns because of the proportion of stocks that it contains. It is in addition consistent with the time horizon that I have in mind, which is five to seven years.I have a total of 50,000 to invest and this will be invested in accordance with the guidelines provided in relation to a balanced risk profile (See Costa 2011). However, I would also like to include a commodity related ETF involving physical gold which is one of the best ways of maintaining asset value. The majority of my investment will take place through the use of exchange traded cash in hand (ETFs). An ETF is an inve stment