Lecture : FIN101-Discussion 1
24 May 2023
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The ceo of the family office is talking about the role of wealth management in risk planning. He first distinguished between speculation and investing and briefly explained that our investment strategies must be written to follow a specific plan to accomplish the goal of our investments. Why: suppose you are interested in a high rate of returns, but you know with high returns there are high risks. As an investor, i can understand why the ceo of "the family office" would advise against borrowing funds from banks for investing. Increased risk: borrowing funds to invest amplifies the risk involved. If the investments do not perform as expected, you still must repay the borrowed funds, potentially leading to financial difficulties. Interest payments: borrowed funds come with interest payments that need to be made, regardless of the performance of your investments. This can eat into your potential returns and reduce overall profitability.
