Question:
You have received a $10,000 bonus which you would like to invest for your child's education. Calculate the value of the bonus in ten years if invested in each of the following:
Option 1: A money market fund that has a current interest rate of 1.75%.
Option 2: U.S. Series I bonds (use the current interest rate for I bonds)
Option 3: A balanced mutual fund that has historically grown by 5% per year
Option 4: A growth mutual fund that has historically grown by 7% per year.
Show your result for each option. Then select the investment that is best suited to your goal and risk tolerance. Explain the advantages and disadvantages of each option.
Your response should explain the advantages and disadvantages of your selection. Take the vantage point of an investment advisor.