Todd O'Hanlon has worked in the management services division of Focus Consultants for the past five years. He currently earn an annual salary of about $120,000. At 33, he's still a bachelor and has accumulated about $100,000 in saving over the past few years. He keeps his saving in a money market account, where it earns about 3% interest. Todd wants to get "a bigger bang for his buck." so he had considered withdrawing $50,000 form his money market account and investing it in the stock market. He feels that such as investment can easily earn more than 3%. Heidi Jackson, a close friend, suggests that he invest in mutual fund shares. Todd has approached you, his broker, for advice.

1. Explain to Todd the key reason for purchasing mutual fund or ETF shares.

2. What special fund features might help Todd achieve his investment objectives?

3. What types of mutual fund or ETFs would you recommend to Todd?

4. What recommendation would you make regarding Todd's dilemma about whether to go into stocks, mutual fund, or ETFs? Explain.

5. Explain to Todd the rationale for choosing ETFs over mutual funds.