Financial Accounting Assignment - Investment and Savings Analysis

This financial accounting assignment analyzes a hypothetical scenario where an individual has annual savings and an inheritance to invest. The report calculates the individual's annual savings, detailing income and expenses. It then explores various investment options, including Australian shares, properties, fixed interest-bearing securities, and cash investments. The report provides a comparative analysis of these options, considering risk and return profiles. Finally, it offers investment recommendations based on the investor's objectives, differentiating between strategies for stable returns versus maximizing returns with higher risk tolerance. The report references several academic sources to support its analysis and recommendations.

Running head: FINANCIAL ACCOUNTING ASSIGNMENT
Financial Accounting Assignment
Name of the Student:
Name of the University:
Authors Note:

1FINANCIAL ACCOUNTING ASSIGNMENT
Annual savings and inheritance:
The annual savings of the person is calculated in the following table shows that the
person is expected to save $50,148 per annum. Investing such funds correctly would help the
person to earn significant amount of return in the future.
Particulars Amount ($) Amount ($)
(A): Gross salary per annum 75,000.00
Rent 7,800.00
Electricity (500 x 4/4) 500.00
Internet (80 x 12/4) 240.00
Food (100 x 52) 5,200.00
Clothing (30 x 52) 1,560.00
Medical (66 x 12) 792.00
Mobile phone (80 x 12) 960.00
Car expenses (120 x 52) 7,800.00
(B): Total expenses 24,852.00
Savings (A-B) 50,148.00

2FINANCIAL ACCOUNTING ASSIGNMENT
In addition the inheritance of $65,000 can be invested either in the shares of companies having
their shares listed in Australian Securities Exchange (ASX), properties, fixed interest bearing
securities or as simple cash in business (Guenther, Johan & Schweizer, 2018).
Investment decisions:
Investment in Australian shares would help the person to earn significant amount of
return both in the form of dividend and in capital appreciation of share values. However, the risk
in investment in shares of companies is little more risky compare to other investment options
(Huang & Pearce, 2015). Investment in properties on the other hand would be relatively less risk
with stable return. Investment in fixed interest bearing securities will almost eliminate the risk
aspect with fixed annual return on investment. The riskiest investment option out of all is the
cash investment option. However, it gives the investor an option to earn significant amount of
return on such investment (Salge, Kohli & Barrett, 2015).
Recommendation:
Finally, the decision of investment shall be based on the objective of the investor. If the
investor is looking to earn stable return without any risk then fixed interest bearing securities and
properties would be appropriate. Whereas if the objective is to maximize return on investment
and the investor is willing to take significant risk then Australian shares and cash investments are
the best options (Langfield-Smith, Smith, Andon, Hilton & Thorne, 2017).

3FINANCIAL ACCOUNTING ASSIGNMENT
References:
Guenther, C., Johan, S., & Schweizer, D. (2018). Is the crowd sensitive to distance?—How
investment decisions differ by investor type. Small Business Economics, 50(2), 289-305.
Huang, L., & Pearce, J. L. (2015). Managing the unknowable: The effectiveness of early-stage
investor gut feel in entrepreneurial investment decisions. Administrative Science
Quarterly, 60(4), 634-670.
Langfield-Smith, K., Smith, D., Andon, P., Hilton, R., & Thorne, H. (2017). Management
accounting: Information for creating and managing value. McGraw-Hill Education
Australia.
Salge, T. O., Kohli, R., & Barrett, M. (2015). Investing In Information Systems: On The
Behavioral And Institutional Search Mechanisms Underpinning Hospitals’is Investment
Decisions. MIS Quarterly, 39(1).