Discuss how taxes, fees,

Explain the level of and inflation could

Explain what the risk and potential Provide a real- positively or negatively
Type of investment is and return on world example of impact this investment
Investment how it works. investment. this investment. and how.

John Doe invested

$1,000 in Bitcoin,
hoping its value Taxes: Capital gains taxes
would increase over can apply to profits from
Investment Cryptocurrency is
time. He bought a cryptocurrency
Choice #1 considered a high
small fraction of a investments, potentially
Cryptocurrency is a risk due to the
Bitcoin at a high reducing returns.
digital/virtual prices fluctuating
price, anticipating Fees: Transaction fees
currency design to within short periods
long-term growth. and exchange fees can eat
work through however, the
However, into profits.
computer networks. potential for a high
cryptocurrency Inflation: High inflation
growth is also
prices are highly can ruin the purchasing
significant
volatile, and John's power of cryptocurrency
investment could over time.
potentially lose
value.
Maria purchased a
two-bedroom condo
in a growing
Real estate is downtown area. She
Taxes: Property taxes and
considered a renovated the unit,
capital gains taxes can
moderate-risk increasing its
Investment change returns.
investment market value. She
Choice #2 * Fees: Property
Risks included then rented it out to
management fees and
market fluctuations, tenants, generating
Real estate involves closing costs can reduce
property consistent rental
owning or renting profits.
maintenance costs, income. This income
property * Inflation: Inflation can
and tenant issues., stream provides her
increase rental income and
Offers potential for with cash flow,
property value over time,
stable returns while the property
potentially offsetting the
through rental itself appreciates in
impact of inflation on
income and long- value over time,
buying power.
term appreciation. potentially leading
to significant
returns when she
eventually sells.

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School.
 Sarah deposits $500
into a savings
savings accounts are account with a 1.5% Taxes: Interest earned on
Investment considered very interest rate. The savings accounts is
Choice #3 low-risk interest earned is taxable, reducing returns.
investments. The automatically added * Fees: Some banks may
savings account is a
primary risk is the to her balance, charge monthly
basic deposit
potential for low causing her savings maintenance fees.
account at a bank or
returns due to to grow steadily * Inflation: Inflation can
credit union.
inflation, which can over time. This erode the purchasing
erode the provides a secure power of savings over
purchasing power of and easily accessible time, making it less
savings over time. way for Sarah to valuable.
save for a future trip
to Europe.

Part Two—Select and Explain Your Investment Plan

Imagine you win $10,000 in a state competition and decide to invest your prize. First, determine your risk
tolerance. Then, choose two investment options from the lesson for your money. Describe your investment plan
in a detailed paragraph. Be sure to include responses to the following questions:

 Why did you choose these two options?

 How may taxes, fees, and inflation affect your investments?
 How do your choices reflect your tolerance for risk?
 How do you plan to divide your money between the two investment options you chose? Be sure to
include the following terms in your explanation:
o diversification
o risk
o rate of return
o interest rate

Unless Otherwise Noted All Content © 2023 Florida Virtual School. FlexPoint™ is a trademark of Florida Virtual
School.