Saving and Investing

Alex wants to buy a new bicycle that costs AED 1,200 in six months. Alex earns AED 200 per month from doing chores.

• 1. Save AED 200 every month in a savings account.

• Invest the AED 200 monthly in the stock market hoping for a high return.

Answer explanation

1. Save AED 200 every month in a savings account. (Short-term goals are best met with reliable and low-risk saving methods.)

Maria wants to save AED 3,000 as an emergency fund in case she has unexpected expenses.

• 1. Save AED 100 every month in a savings account.

• Use the AED 100 monthly to buy lottery tickets hoping for a big win

Answer explanation

1. Save AED 100 every month in a savings account. (An emergency fund should be safe and easily accessible.)

Jamal wants to save for university, which he will attend in 5 years. He has AED 5,000 saved and can save AED 300 per month.

• 1. Keep all the money in a savings account with low interest.

• Invest in a diversified portfolio of stocks and bonds.

Answer explanation

Invest in a diversified portfolio of stocks and bonds. (For long-term goals, investments with higher potential returns are suitable.)

Sara receives AED 100 as a birthday gift. She wants to buy a game that costs AED 80 but is also considering saving the money for a school trip next month.

• 1. Spend AED 80 on the game immediately.

• Save the AED 100 for the school trip.

Answer explanation

1. Save the AED 100 for the school trip. (Prioritizing needs over wants helps in making better financial decisions.)

Daniel is considering investing AED 1,000. He can choose between a high-risk stock and a low-risk government bond.

• 1. Invest AED 1,000 in a high-risk stock for potentially higher returns.

• Invest AED 1,000 in a low-risk government bond for steady, guaranteed returns.

Answer explanation

1. Depends on Daniel’s risk tolerance and investment goals. (High-risk stocks can offer high returns but also losses; government bonds are safer but offer lower returns.)

Layla wants to buy a laptop in a year, which costs AED 3,600. She plans to save AED 300 per month.

• 1. Save AED 300 per month in a savings account.

• Use the AED 300 monthly to invest in a friend's new business idea.

Answer explanation

1. Save AED 300 per month in a savings account. (For specific short-term goals, a savings account is more appropriate than a potentially risky investment.)