Sarah Mix is a single 30-year-old business owner who has $500 a month toinvest. This money is in excess of the contribution to her company pensionplan. Sarah hears that many of her friends are investing in mutual funds. Hergrandfather, Grandpa Russ, invested in the stock market and lost everything.He advises her to invest only in bonds. Her uncle, Sam, thinks thatshe should invest in stock mutual funds, but only in conservatively managedfunds that invest in U.S. blue-chip stocks. Sarah notes that her Grandpais 70 years old and her uncle is 55 years old. Her friend Jane, who is also30 years old, said she only invests in small capital growth funds.a. What should you advise Sarah to invest in?b. Why do you think these people have different investment strategies?
Sarah Mix is a single 30-year-old business owner who has $500 a month to
invest. This money is in excess of the contribution to her company pension
plan. Sarah hears that many of her friends are investing in mutual funds. Her
grandfather, Grandpa Russ, invested in the stock market and lost everything.
He advises her to invest only in bonds. Her uncle, Sam, thinks that
she should invest in stock mutual funds, but only in conservatively managed
funds that invest in U.S. blue-chip stocks. Sarah notes that her Grandpa
is 70 years old and her uncle is 55 years old. Her friend Jane, who is also
30 years old, said she only invests in small capital growth funds.
a. What should you advise Sarah to invest in?
b. Why do you think these people have different investment strategies?
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