Investment Risks: Case Study, Analysis, and Recommendation Report

This report presents an analysis of investment risks based on a case study involving Mr. Q, a senior executive with a substantial amount of capital. The report evaluates two investment proposals: one from State Prosper Development Pte. Ltd (SPD), focusing on restructuring heritage buildings, and another from the Provincial Wealth Bank Ltd (PWB), offering a diversified portfolio. The analysis includes the merits and demerits of each proposal, considering factors such as returns, risks, liquidity, and investment time horizons. The SPD proposal offers stable returns with lower risks, while the PWB proposal offers higher potential returns but also carries greater risks. The report concludes with a recommendation tailored to Mr. Q's specific circumstances, investment objectives, and risk tolerance, considering his lack of prior investment experience and desire for minimal involvement in decision-making. The report also includes a bibliography of relevant sources used in the analysis.

Running Head: INVESTMENT RISKS
INVESTMENT RISKS
NAME OF THE STUDENT
NAME OF THE UNIVERSITY
AUTHOR NOTE

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Table of Contents
Introduction......................................................................................................................................2
Proposal A related to SPD Merits and demerits..............................................................................3
Proposal B related to PWB Its Merits and Demerits.......................................................................4
Recommendation.............................................................................................................................4
Bibliography....................................................................................................................................6

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Introduction
Mr. Q is a senior executive, who is working for a multinational company and is in his
mid30s. He is married and his wife is also a full-time work person. They both have a daughter
aged 4 and a son aged 6. They have stable jobs for the upcoming 5years. However, Mr. Q has got
an amount of SGD 1.2 million, from the estate of his deceased father, and apart from this he also
has a family savings amounting to SGD 300000. Therefore overall he has SGD 1.5 million to
invest. For that purpose he has met several executives from various investment as well as
financial firms and has finally decided to finalize his investment plan among the two proposals.
One is from Mr. Hanson, who is the director of the State Prosper development pte. Ltd (SPD)
and the other one being from the Ms. Hilary, who is the director in the private wealth department
of Provincial Wealth bank limited (PWB).
Proposal A related to SPD- Its Merits and demerits
State Prosper Development Pte. Ltd or SPD is a privately held firm, who are specialized
in the field of restructuring of the old heritage buildings into new apartments for the residential
purposes among the major cities of Germany. Here, generally the project last for the period of
3years and during this time, the company seek investors who are willing to invest with a
minimum amount starting from SGD 50000 and for the minimum period of 12 months.
However, during this period they will be entitled to receive a 2.5% of the amount invested every
quarter. After a completion of a year, the investor will receive 10% on their invested amount and
along with that they will also receive 2% extra bonus on the invested amount. It has been noted
that if the investors will extend their investment period above 12 months till the time of the

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completion of the project that is for 3years, then the investors will be entitled to get extra 3%
returns apart from that 12% returns out of their total invested amount.
For example, if he is investing with the amount of SGD 10000, then during each quarter,
he is going to receive an amount of SGD 2500 and apart from that he is also going to receive
10% + 2% at the end of the 12 months which means he will receive an amount of SGD 12000. If
he wishes to continue for three years then the total amount that he will receive from this
investment will be SGD 39000, including that 3% extra as the loyalty bonus. The investment will
be covered by the insurance and it is also pretty much stable and flexible without any kind of
added pressures, neither do it posses any kind of high risk, except for the delay in getting the
plan for the re-structuring approved and that delay will also occur due to political pressures.
Therefore, it is supposed to be the most stable plan except for the fact that there is just a return of
10% to 12%, while some other investment plan might offer more percentage or rate of returns.
Proposal B related to PWB Its Merits and Demerits
This proposal has been made by Ms. Hilary who is the executive director of the private
wealth department of the Provincial wealth bank ltd, and she has suggested Mr. Q to invest in
their portfolios. She has suggested a diversified portfolio for Mr. Q, which will be proportionate
weighted and diversified to include all cash deposits, foreign currencies, local stocks, bonds and
the foreign stock that will include the US, EU and the greater china. The investors here, have a
discretionary investment management account. Here, the bank has made mandate to the clients to
make investment decisions on his or her behalf. Here, the benefit lies in the fact that Mr. Q will
be freed from all the decisions to be made and also if he wishes he can make specific requests for
any kind of changes. Mr. Q will also have a say into which category he would like to invest and

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not. The minimum amount that is required to be invested in the PWB is SGD 1million, however
there are no fixed period and it is quite liquidate. However, in order to withdraw their money
they have to give one month notice period. The returns here lies from 6-18%, so it’s highly
flexible and not fixed. During the boom period they might get around 15% and in the downward
times, they might just receive 6%. Therefore, it has to be noted the risk is pretty much higher.
The higher the risks, the higher the returns will be, however, there are no certainty of the same.
Recommendation
It has to be noted that Mr. Q has never been into investment thing, though he has his
insurances that took care of his and his family’s wellness and other needs and along with that it
also has been noted that he don’t want to get into the hassle of making investment decisions, so
in that case probably proposal B will be the one that he should be gone for, where he will be
away from all the hassles and he might be able to get good returns as well. The minimum amount
that is required to be invested in the PWB is SGD 1million with no fixed period and it is quite
liquidate as well. However, in order to withdraw their money he have to give one month notice
period. The returns here lies from 6-18%, so it’s highly flexible and not fixed. However, if
stability is concerned, then proposal A for the SPD is beneficial, as it allows a constant cash flow
every quarter plus there are less risks involved and there is ample security with decent returns.
Therefore, in terms of that proposal A will be more recommendable. The investment will be
covered by the insurance and also it is pretty much stable and flexible without any kind of
pressures or high risk, except for the delay in getting the plan for the re-structuring approved and
the delay will be due to political pressures. Therefore, it is supposed to be the most stable plan
except for the fact that there is just a return of 10% to 12%, while some other investment plan
might offer more percentage.

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