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B. Hypothetical Investors
The New Investor
Her name is Sally and graduated college last year. She has a stable job that she likes and earns $35,000/year salary. After funding her 401(k)/IRA plan and paying her monthly bills, she has $300 per month to invest. She is investing for a few reasons. First and foremost is to save for a secure retirement. She also has some shorter-term goals. In five years, she would also like to buy a house. We would recommend that Sally set up the following investment program.
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401(k) plan/IRA: This money is for her retirement. We always recommend that customers lean to the conservative side with this money. Woodstock Discount does not recommend active trading or investment in speculative issues in this type of account. We recommend that she allocate her investment dollars as follows
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20% Money Market Fund. |
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30% Investment Grade Bond Fund. |
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50% Growth Mutual Fund. |
The 401(k) plan that she is in will have the above funds. If she has an IRA instead of a 401(k) plan, she should she Woodstock Discount's recommended list of funds. She should then build the portfolio listed above.
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Brokerage Account: She has a traditional brokerage account with Woodstock Discount. She asked us for advice and we told her to, on a monthly basis, invest in the following manner.
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10% Money Market Fund. |
We always recommend that 10% of savings go into a money market fund. Emergencies come up, be prepared. |
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20% Bond Fund |
Investment grade with at least an average credit rating of BBB. |
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70% Growth Funds (35%/35%) |
She selected two different growth funds from out list of recommended growth funds giving her 35% in each fund. |
She follows this plan every month.
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See out list of recommended mutual funds:
Growth Funds |
Growth & Income Funds |
Income Funds
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