This is the story of the Tortoise and the Hare. We all know that the Tortoise is slow but steady and that the Hare is very fast.  In this story we will see what happens when they decide to make some investments and compare their results.

In their discussions it became clear that the two of them had differing ideas on how to invest or not invest. The Tortoise wanted to

invest in the type of investment that was least risky, such as certificates of deposit, municipal bonds, government bonds and AAA corporate bonds. He also liked municipal bonds because they were tax free.

The Hare wanted to invest in the type of investment that would have a higher return, even if it was more risky.  He figure that by diversifying his investments he could reduce his risk since the investments he would chose would be riskier.  He

was interested in stocks and less highly rated corporate bonds.

So the they decided that they would make their investments, investing the same amount, $500.  At the end of one year they would compare their results.

The Tortoise invested his $500.  He invested in a certificate of deposit for one year.  It only paid 1.75% but there was no risk.  He invested in some municipal bonds which only paid 2.5% but they were basically no risk and were tax free.  He invested in some AAA corporate bonds that would pay 3.2%.

  The Hare had decided to invest his $500 in a variety of corporate stocks. He wanted to earn the most amount possible, even if the risk was higher. He invested in stocks in different companies and different industries so that he would have a diversified portfolio.

At the end of the year the Tortoise and the Hare compared their gains and earnings. They wanted to see which of them had the largest return on their investments.

The Tortoise provided the results of his investments for the year. The total return on his three

after one year was $12.15. Then the Hare added up the results of his investment in stocks for the year. One of the stocks did very well and he had a return on that stock of $50.00. The other stock he had purchased did not do well. He received no dividends on it and the value of the stock decreased by $100. So he actually lost a total of $50 during the year.

The Tortoise invested in investments with lower returns but with less risk. The Hare invested in stocks expecting a larger return but with more risk. At the end the Tortoise was the winner.

The End