The topic of safe versus risky investments has appeared multiple times in IELTS Writing Task 2 exams, particularly in 2019-2023. Based on analysis of past papers, this theme commonly appears in Advantage/Disadvantage or Discussion essays, reflecting its relevance to global economic discussions.
Safe vs risky investment choices in modern business environment
Examination Question Analysis
Some people prefer to invest their money in safe options with lower returns, while others choose riskier investments that may bring higher profits. Discuss both views and give your own opinion.
This question requires:
- Discussion of both investment approaches
- Analysis of reasons behind each choice
- Personal perspective with supporting arguments
- Balanced evaluation of both viewpoints
Band 8.5 Sample Essay
The choice between secure and high-risk investments represents a fundamental financial decision that individuals must make based on their circumstances and risk tolerance. While both approaches have their merits, I believe a balanced portfolio combining both strategies is most prudent.
Those who favor conservative investments prioritize financial security and stable returns. Government bonds and fixed deposits, for instance, provide guaranteed albeit modest yields, protecting capital from market volatility. This approach particularly suits retirees or those with immediate financial responsibilities, as it ensures reliable income streams and preservation of wealth. Moreover, safe investments offer peace of mind during economic uncertainties, serving as a buffer against unexpected financial challenges.
Conversely, risk-tolerant investors pursue potentially higher returns through vehicles like stocks, cryptocurrencies, or venture capital. This strategy can generate substantial wealth, as demonstrated by successful tech startup investments or cryptocurrency gains. Additionally, riskier investments often provide opportunities for portfolio diversification and can serve as hedges against inflation. However, the possibility of significant losses requires careful consideration and thorough market research.
In my opinion, the optimal approach combines both strategies through strategic asset allocation. By maintaining a core portfolio of stable investments while dedicating a portion to higher-risk opportunities, investors can balance potential rewards with necessary security. This hybrid strategy allows for capital preservation while still capturing upside potential in growing markets.
Band 6.5 Sample Essay
Nowadays, people have different ways to invest their money. Some people like safe investments with small profits, but others prefer risky investments with big returns. I will discuss both sides and give my opinion.
People who choose safe investments have good reasons. First, they don’t want to lose their money. Safe investments like bank savings give them sure profits, even if small. Second, they feel less worried about their money. This is good for old people or families with children who need stable income.
Other people like risky investments because they can make more money. For example, they buy stocks or bitcoin. Sometimes they get very high profits. Also, young people often choose this way because they have time to recover if they lose money. But risky investments can be dangerous because people might lose everything.
I think the best way is to use both kinds of investments. People should keep some money in safe places and use some for risky investments. This way, they can get good profits but still have safe money. It’s like not putting all eggs in one basket.
Scoring Analysis
Band 8.5 Essay strengths:
- Sophisticated vocabulary: “strategic asset allocation”, “portfolio diversification”
- Complex sentence structures
- Clear topic progression
- Well-developed arguments
- Coherent paragraphing
- Appropriate academic tone
Band 6.5 Essay limitations:
- Simpler vocabulary
- Basic sentence structures
- Less sophisticated arguments
- Limited use of linking devices
- More informal tone
- Repetitive ideas
Key Vocabulary
- Asset allocation (n) /ˈæset ˌæləˈkeɪʃən/ – The strategy of dividing investments among different assets
- Portfolio diversification (n) /ˌpɔːtˈfəʊliəʊ daɪˌvɜːsɪfɪˈkeɪʃən/ – Spreading investments across various types
- Risk tolerance (n) /rɪsk ˈtɒlərəns/ – The degree of uncertainty an investor can handle
- Venture capital (n) /ˈventʃə ˈkæpɪtl/ – Funding for early-stage, high-potential startups
- Market volatility (n) /ˈmɑːkɪt ˌvɒləˈtɪlɪti/ – Rapid price fluctuations in financial markets
For practice, try writing your own essay about whether governments should encourage safe or risky investments to boost economic growth. Share your essays in the comments for feedback and discussion.
