Ch.12 · Matching Schemes to Investor Profiles · medium
An investor has two goals: (1) child's college admission in 2 years and (2) retirement in 20 years. How should they approach fund selection?
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EXPLANATION
Each goal requires a different fund type based on its horizon. The 2-year goal requires capital preservation — a short-duration debt fund. The 20-year retirement goal benefits from equity's long-term compounding. Treating both goals with the same fund ignores their fundamentally different risk requirements.
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