- Unit 1
Businesses, governments and individuals carry out investment. There are many different type of investment, including:
- savings account
- term deposits
- cash management account
- managed fund
- debentures and unsecured notes
Financing an investment can be done either through personal savings or borrowing. Advantages of saving for an investment means no interest is paid, but you might had to have extra costs (e.g paying rent while saving for a house)
Loans have different features. Personal loans can be secured or unsecured. Home loans can either have a fixed interest rate or a variable interest rate.
A fixed interest rate is a constant rate. The repayment amount is always the same.
A variable interest rate moves up or down depending on the market. A variable rate continually changes and fluctuates. This is usually done through the RBA.
An income and expenditure account is a record of income earned and money spent during the previous week. Take a look at an example below:
|1 Jul||Balance available to invest||$30.00||1 Jul||Rent||$60.00|
|1 Jul||Pay for casual work||$200.00||2 Jul||Magazine||$8.00|
|3 Jul||Medicare refund||$17.00||4 Jul||Groceries||$27.00|
|6 Jul||Interest on deposit||$47.00||5 Jul||Donated to Red Cross||$5.00|
|Total income||$294.00||7 Jul||Mobile phone||$20.00|
|7 Jul||Balance available to invest||$174.00|
|8 Jul||Balance available to invest||$174.00||8 Jul||Rent||$60.00|
|8 Jul||Pay for casual work||$208.00||9 Jul||Groceries||$29.00|
|12 Jul||Medicare refund||$20.00||11 Jul||Doctor bills||$18.00|
|14 Jul||Birthday gift||$50.00||11 Jul||New fishing rod||$50.00|
|Total income||$452.00||12 Jul||Newspaper bill||$18.00|
|14 Jul||Petrol for car||$23.00|
|Balance available to invest||$218.00||14 Jul||Balance available to invest||$218.00|
Investors might only choose to make investments ethically. This is known as ethical investment
This can be done in two ways:
- Negative screening: avoids investment in some firms such as cigarette or alcohol companies
- Positive screening: limits investing to desirable firms such as renewable energy or healthcare
Tassal is a company operating in Tasmania that produces sustainable and environmentally friendly fish. In addition to their strong emphasis on being environmentally friendly, it develops local community support programs and offers scholarships to students studying aquaculture.
Bendigo Bank’s Community Bank Program allows those in rural and remote areas to have access to normal banking, which allows communities the right to operate a Bendgo Bank franchise branch. Revenue is shared between the company and the community, and Bendigo Bank provides banking support.
This can be considered as Corporate Social Responsibility. For example, Maccas uses recycled paper.