Imagine you inherited $50,000, and you want to invest it to meet two financial goals: (a) to save for your wedding you plan to have in two years, and (b) to save for your retirement a few decades from now. What types of investments would be best for each goal?

Solution and Explanation:

Evaluation for investment decisions

CD – 24 months= Maturity period has met the criteria for short term goal and money used for their wedding

General electric bond – 18 months=Bonds are generally Long term or short term depends upon the maturity period for this bond has only 18 months maturity period

Money market shares = This instrument is readily converted into cash at any point in time

Saving account = No obligation of any maturity period saving account is personal account

Short term junk Bonds = Short term junk bonds are for a short period of time

Energy sector mutual fund = This sector mutual fund has long term maturity period and thereafter returns in the long term

Johnson & Johnson stock = It is considered as a dividend growth stock and investor invest for high growth on the market value of the share price

General electric bond – 2.5 years = This instrument has a long term maturity period

Dow ETFETF is retained for capital gains in the near future period but their gestation period is high

Treasury Note – 60 months = Investment for 60 months which is not suited for short term goal of investor