Your great aunt Mary passed away and left you and inheritance of $5,000.00. Since you don't have a need for the money in the near future, which of the following would be the best place to put the $5,000.00? a) a savings account earning 1% interest
b) a checking account
c) high risk stock in a producer of natural gas that is predicted to triple in the next year
d) a five year cd paying 4.38% annually
I think c or d, but I'm leaning more toward d
I agree. D is the best answer.
Thank you
You're welcome.
When deciding where to put your inheritance of $5,000, it's important to consider your goals, risk tolerance, and time horizon. Let's break down the options provided:
a) A savings account earning 1% interest: This option offers low risk, but the return is also quite low. If you don't need the money in the near future, a savings account can provide a safe place to store your funds, but it won't generate significant growth.
b) A checking account: A checking account is primarily used for daily transactions and may not be the best option for long-term investment or growth. It typically doesn't offer any interest on the balance.
c) High-risk stock in a producer of natural gas: Investing in high-risk stocks can potentially lead to substantial returns, but it also comes with a higher level of risk. While the predicted growth of the natural gas company may be appealing, it's important to note that predictions aren't always accurate, and the stock market can be volatile.
d) A five-year CD paying 4.38% annually: Certificates of Deposit (CDs) are low-risk investments with a fixed interest rate over a specific term. In this case, a 5-year CD with a 4.38% annual interest rate could be a good choice if you have a longer time horizon and are comfortable with locking your money away for that duration.
Considering your situation, if you don't have an immediate need for the money and are comfortable with a longer-term commitment, option d) a five-year CD paying 4.38% annually, could be a suitable choice. It provides a higher return compared to the savings account, while also offering relatively low risk. Keep in mind that any investment decision carries some level of uncertainty, and consulting with a financial advisor is always a wise step before making any investment decisions.