Question

1. As people get closer to retirement, their investment goal often changes Assume your parents are 60 years old now and have accumulated $200,000 in a retirement account. Also assume they would like to retire when they are 65. In this situation, which type of mutual funds would you recommend for them to invest? Why?

2. Personal financial management simply means gaining understanding of your financial situation to make the most of your assets in daily life and in planning for your future. So what did you learn most from the course? How can you apply the knowledge and skills you gained from the class to make wise financial decisions? Please be more specific.

Answer 1

1. While making an investment in mutual funds or any other asset, it is very important to consider the end goal of that investment and the risk appetite of the investor

Typically, risk appetite at a lesser age is much more than the risk appetite at an age closer to retirement

In case the investment is for retirement, and the age of the investor is close to retirement, investor must ideally invest in debt mutual funds

These debt funds should have their goal aligned to the goal of the investors. For e.g. they should be highly risk averse and ensure protection of capital. These debt funds should intern invest in highly rated entities and government bonds to guarantee the investor good returns.

Answering only the 1st question as per the guidelines