Question

After reading Chapter 12 of Foundamentals of Corporate Finance on Capital Market History, how would you invest an extra $10,000 you have today? Write 1 paragraph on why you would make those choices.

Answer 1

If I had $10,000 today, my first goal would be identifying for what purpose I would need the money. I would make sure that this is for my long term goals. The best asset class for long term wealth creation with protection against inflation is the Equity markets or the capital markets. Out of $10,000 (100%), I would invest 90% in the stock markets (Various types) and invest the remaining 10% in bonds for stability. Out of the equity portion (90%), I would invest 30% in large cap stocks, 20% in mid cap stocks, 20% in small cap stocks and 20% in international emerging market funds.