Chapter 8 business summary

To evaluate the most suitable investment option
Risk:
High ROI if investment succeeds, big loss if investment fails (ie. gambling).
[Diversification=combination of investment options to spread risks]

ROI:
Tool that measures efficiency of the investment (indicator of what investor will get back
above original investment made)

Timelines (period of investment):
Long period of investment , more risks able to be taken (starting retirement fund at 20yrs vs
50yrs)


Investment strategies include
Chapter 8: Investment




Growth Investment Strategy Balanced Investment
-High risk Strategy
-Long-term capital growth (no -Medium risk
monthly income) -Capital Grosth/Monthly Income
-Shares on JSE, but blue-chip -Equities, interest bearing
reduces risk investment: fixed deposit, property
investment (monthly rent income)




Conservative Investment
Defensive Investment Strategy
-low risk Strategy
-Monthly Income + some Capital -preferably Low risk
Growth -Monthly income+Capital amount
-Property investments+ money in invested
the bank (smaller investment in -Property=monthly income+capital
equities) growth
-Cash instruments= monthly income


Investments also include: Equities/Shares, Debentured, Retirement Annunities+Pension Funds,
Endownments, Offshore Investments, Unit Trusts, Collectibles, Notice Deposits, Fixed Property

1.Equities/Shares
Owners of these own a portion of the business :
-Shares bought from company for 1st time (owner contributes to business capital)
-Shares bought on JSE from prev. shareholder (no impact on business capital)

Company is JSE listed Company is JSE unlisted
Shares/Equities performance Financial position NOT AVALIABLE around
is regularly avaliable public except shareholders, banks,
SARs,creditors. Public can’t measure ROI