Question
Calculate the amount of money the Dumonts will have in their savings account if they add no other funds and keep it invested at 3
Calculate the amount of money the Dumonts will have in their savings account if they add no other funds and keep it invested at 3 percent over the next 25 years. Calculate how much they can accumulate over 25 years if they move the money into a money market mutual fund earning 5 percent. Now, calculate how much they can accumulate over 25 years if they move the money into a diversified stock mutual fund earning 9 percent. Based on your calculations and the Dumonts risk tolerance, would you advise them to move their savings into the money market mutual fund? Into the diversified stock mutual fund? What advantages and disadvantages should be considered? (Hint: Use your financial calculator or see Chapter 3.)
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