Amanda is 20-years-old and looking to invest $1000. She has always played it safe with very low-risk investments, but now she is ready to take a bigger risk to see if she can earn a bigger return on her investment. She is comfortable having this money tied up for several years, but she would like to withdraw the money sometime in the next 5 to 10 years. Which type of investment will BEST fit Amanda’s needs?
A.
money market mutual fund
B.
certificate of deposit
C.
bond
D.
401k
Answers
Answered by
3
Answer:
401k THIS IS RIGHT ANSWER
Answered by
1
Given,
Amanda is 20-years-old and looking to invest $1000. She is comfortable having this money tied up for several years, but she would like to withdraw the money sometime in the next 5 to 10 years.
Solution,
Know that the duration of the certificate of deposit has a period of seven days to one year.
Know that bonds have a duration depending upon the issuer but there is no gain in that period.
Therefore, mutual funds in the money market are the best option as it shall give a high return in the said time period.
Hence, the correct option is (A) i.e. money market mutual funds.
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