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B. Hypothetical Investors
The Big Earner
His name is Chris. He is 37 and he is a successful business owner. He worked for a large corporation for 5 years out
of college, figured out a better way to do the job, got a loan, started his own company and flourished.
He has now paid off his business loan and has a large income. His company has a 401(k) plan. He invests
the maximum allowable every year. He needs no interest income or dividends from his investment portfolio
as he has adequate income from his business. He also has a high tolerance for risk and volatility in his
investment portfolio. He does not foresee needing to access his brokerage account assets and he wants to
let them grow over time. We recommend that he build a portfolio designed to give the potential for growth.
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401(k): This is his retirement "nest egg". 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 he allocate hisinvestment dollars as follows:
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10% Money Market Funds. |
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20% Investment Grade Bond Funds. |
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70% Growth Mutual Funds. |
The 401(k) plan that he is in will have the above funds. He should save the maximum allowed each year.
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Brokerage Account: Chris holds a traditional brokerage account with Woodstock Discount. He asked us for advice on building
a portfolio designed to provide the potential for growth. He is comfortable with a high degree of
volatility in portfolio value and understands the risks involved in owning individual stocks. We advised
him to build the following portfolio. We also advised him to review the Woodstock Discount's rules for common
sense investing and use stop losses.
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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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25% |
Aerospace/Defense |
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25% |
Semiconductors |
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20% |
Diversified Financials |
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20% |
Biotechnolgy |
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See out list of recommended mutual funds:
Growth Funds |
Growth & Income Funds |
Income Funds
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