Marketing Essay Example | Topics and Well Written Essays - 1750 words

Marketing - Essay Example This paper intends to examine a favorable portfolio for a 25-year old, planning to invest $100,000 in both mutual funds and stocks. The study seeks to roll portfolio that considers investments with high-risk tolerance. The portfolio will include three stocks, three mutual bonds and 2ETFs. As point of departure investment strategy is fundamental in meeting the anticipated goals. For instance, in this study, the portfolio attributed to high risk is adopted because the young investor is aggressive. This implies that, the more risk born, the more aggressive the portfolio (David, 112). The aspect of aggressiveness of a portfolio versus the extent of risk to be born, explains the aggressive portfolio to be considered in this study. The investor should embrace the aggressive type of portfolio. An aggressive portfolio devotes a bigger portion to equities and relatively less portions to bonds and other fixed income securities. In this study, an aggressive investment portfolio is considered. F or purposes of in- depth understanding, examine the following pie chart indicating, the approximated percentages of investments in each section (Mark, 45). This portfolio intends to invest in equities, treasury fund, bond funds and cash equivalents. The Equities take a large share because of the aggressive nature of the investor and this is attributed to high-risk investments (David, 112). To achieve the designated portfolio, the investor should embark on strategies to ensure the right asset allocation. The capital should be apportioned between the appropriate asset groups. For instance in our case the $100,000 should be apportioned as follows Investment type % Amount ($) Mutual funds 46 46,000 Stock fund 43 43,000 Cash and equivalents 11 11,000 Mutual funds From the definition, aggressive growth is a mutual fund investment goal that aims at high capital gain potential growth stocks. These are stocks of companies, which are anticipated to grow at a rate faster relative to the genera l stock market. In essence, the aggressive investor should bear in mind that this type of portfolio requires growth investment strategy because of the anticipated higher volatility, which is measured by beta. Before investing in an aggressive mutual fund, first ascertain that, the fund is real aggressive growth fund by looking at the stated objective within the mutual fund prospectus or find it from the mutual fund family website (Harry, 45). This study establishes that to pick the intended aggressive mutual fund, check on the market value of beta, which is 1.00, and consequently ascertain that, the beta value of an aggressive mutual fund is slightly above 1.00. Conversely, consider the taxes aspects. The preeminent performing mutual funds, particularly over long periods such as 10 years and more are habitually funds with low tax costs. The aggressive investor needs to look for the most tax-efficient funds (Harry, 45). This is because, previous studies on the correlation between low cost taxes, low turnover ratio and low expenditure ratio indicate highly positive. This implies that this portfolio investment is probable of creating immense gains over the period of 35 years. The young investor is advised to invest 46% of his capital in the following categories of mutual funds. As a smart investor, he considers an aggressive fund, which invests in mid-cap stocks or small-cap stocks. The reasoning behind this is that, the likelihood of already having a large-cap stock fund in the investment portfolio is high, consequently no need for more. The Fidelity Capital Appreciation (FDCAX) is the best aggressive growth mutual fund strategy to be considered in this investment portfo