Theoretical £100,000 to invest

dunstonh

opinions4u wrote: »

How to generate 5% in a month from a savings account? I'm REALLY interested! Tell me!!

Every option that offers that potential is going to be speculative or a gamble. Thats not investing.

What's the OPs son going to learn about investing when the timescale is just one month? Perhaps the OP could help by saying what the subject is so we know why its being asked? Thats why I think it could be a trick question as some will have had gains and some will have losses and is being done to highlight risk and reward. I had a something similar on my Economics course all those years ago (except ours was over a long period) and I picked Tesco shares back then. I would probably pick them now as well.

b56c

Thanks to all who've sent useful replies especially dunstonh

Once I find out which module this coursework applies to I'll let you know for your expert opinions!

b56c

The module for which my son has to do the £100,000 investment coursework is called Personal Finance and is part of a Business and Finance Degree. He has only had one lecture so far and this is also the first time he is doing anything about Personal Finance. The more I think about it, the more I am coming around to the notion that the lecturer is probably looking at who will be the high risk takers, those prepared to make huge losses in the hope of making a quick fortune as opposed to those who have a more cautious approach and would be happy to make a small profit without jeopardising their capital. All their actions and choices have to be justified. Any comments?

gozomark

what is the exact wording on what he's been asked to do ? the devil is in the detail

ManAtHome

gozomark wrote: »

you have a 90% plus chance of this working ! (of course if you lose, you lose the lot !)

LOL - that's the strategy I was thinking of, but with a "if you lose the lot, get round to Merv's for your money back"...

Seems a bit of a strange excercise unless it's part of an interview for a hedge fund manager - 5% a month return is more gambling than investing IMHO.

Aegis

Looking for the equivalent of around an 80% annualised return would require some pretty high risks all in all. As such, there really is no guaranteed way to increase the holding by the 5% required, so it's either an exercise in futility or a demonstration of what can go wrong if you over-aim your financial strategy.

My gambling suggestion wasn't entirely facetious!

dannyboycey

The line between investing and gambling becomes very blurry as the potential for higher returns increases (i.e. the higher the risk). It's a really interesting topic for discussion actually...

Also, chuck in a political event like the one we're experiencing now, and things are even more ambiguous! What was once seen as risk free, is no longer.

benood

Effectively he just needs to get the attention of his Tutor - in the end he wants a 2:1, not a sure fire way of making a notional £5k in a month.

The roulette example was great IMO as long as no one else in his tutor group comes up with it, as gozo said, the phrasing of the question is critical to the answer you give.

Lokolo

Aegis wrote: »

Looking for the equivalent of around an 80% annualised return would require some pretty high risks all in all. As such, there really is no guaranteed way to increase the holding by the 5% required, so it's either an exercise in futility or a demonstration of what can go wrong if you over-aim your financial strategy.

My gambling suggestion wasn't entirely facetious!

Well I'm never coming to you for advice

Milarky

gozomark wrote: »

bet 5,000 on black at roulette - if win, stop
if fail, bet 10,000 - if win, stop
if fail, bet 20,000 - if win, stop
if fail, bet 40,000 - if win, stop
if fail bet the rest on 6 different numbers

you have a 90% plus chance of this working ! (of course if you lose, you lose the lot !)

This might be better still if the running bet is broken down into (say) 10 equal stakes

So each stake of 10,000 has a '90%' chance of turning into 10500 and a 10% chance of turning into nil. On average one will go to nil, therefore but 9 will come up trumps. Opps, thats -5000!!!!