Investment Decision

Running Head:Investment Decision 1
Investment Decision
Name
Date
Institute

Investment Decision 2
The potential investment amount of SGD 1.5 million comprises of an inheritance
amounting to SGD 1.2 million and family savings of SGD 300,000. The only financial problem
for Mr. Edward is securing funds for his children’s tertiary education which is a total of SGD
350,000. Mr. Edwards and his wife will continue working just in case the investment does not
contribute to the revenue they expect. The investment profile indicates Mr. Edward is a moderate
investor (Duchin, 2010). He is middle-aged with kids who are going to be finishing their studies
in the next 4-6 years. Most of his returns will be used for the payment of the school fees.
Mr. Edward is willing to take high risk with both long term and short term holdings
(King, 2010). Ms. Ang’s proposal guarantees a return of 3% for every three months for any
investment made starting from 50,000. The returns will be guaranteed as long as the oil and
energy prices do not fluctuate negatively. If the prices of oil go too high, its demand will
decrease within the same period of investment. For the short term investment to bear any
interests, Mr. Edward will also need the economic conditions not to deteriorate. The interst rtaes
offered by Ms. Ang are very significant and Mr Edwards will generate good income as long as
the ector is not faced with environmental issues.
Mr. Edward falls on two categories of investors. He is goal-oriented and at the same time
consolidating his assets (Janssen, Kramer & Boender, 2013). Ms. Ang’s proposal is high-risk
while Ms. Beh offers a low-risk investment opportunity with most of the investment money used
in bond. Seventy percent of the investment money she is asking for will go into bonds, while the
remaining 30% will be placed in high-risk investments such as foreign stock and cash deposits.

Investment Decision 3
Investment percentages
Bonds foreign stocks Cash deposits Local stock
The chart is a representation of the proposal. The minimum investment is SGD 1 million
with SGD 700,000 being invested into the bond. Bonds are low-risk investments with a
guaranteed return, but its financial interests are limited. Investing in stocks can pose a great risk
considering the challenges of stock investment. First, it is important to note both local and
foreign stock have high returns if a professional trader executes the trades, but there are several
problems to consider. Insider trading is prevalent (Lappalainen, 2017). It makes the stock market
very unpredictable and can lead to huge losses, but at the same time, the returns are very high.
My advice is Mr. Edward should invest in both proposals. He has clearly stated he does
not want to be directly involved in the management of the funds which is a very sound decision
to avoid problems such as insider trading and corruption. Investment diversification is his best
option. Ms. Beh requires a minimum of SGD 1 million. The remaining SGD 500,000 will be
invested with Ms. Ang.
On the bank’s investment, there is a need for an adjustment in the proposal. At the current
interest rates for short and long term bonds, it is economically unsound to invest all that money
in bonds. Only 50 percent (SGD 500,000) should be invested in bond with the rest being invested
in foreign currency, local stock, and foreign stock. It will increase Mr. Edwards expected returns.