Here’s a short answer followed by a long answer.

Short answer:

25% ($25,000) Vanguard Intermediate Investment Grade Fund. symbol: VFICX

25% ($25,000) Vanguard 500 Index Fund. symbol: VFIAX

25% ($25,000) Vanguard Dividend Growth Fund. symbol: VDIGX

25% ($25,000) Primecap Odyssey Growth Fund. symbol: POGRX

Total: $100,000

Pro: I like this portfolio. 75% of your money is invested in the stock market and 25% invested in the bond market. Hold on to this portfolio for at least 5 years. Don’t touch it. You’ll have a good chance of increasing your portfolio worth.

Con: 75% of your money in the stock market and 25% in the bond market may be too risky for you. If so, consider dropping your risk and reward by putting 50% in the stock market and 50% in the bond market.

Long Answer:

Please answer 3 questions:

Question #1: What’s your risk tolerance? Investing in the stock market involves some risk taking. How tolerant are you with this risk? Invest in the stock market if you have high risk tolerance. Invest less of your money in the stock market if you have low risk tolerance.

Question #2: What are your goals for this money? Retirement 10 plus years from now? Or funding a child’s college education or a home improvement project in the next 1-3 years?

Question #3: What’s your time horizon for this money? Answering question #2 above answers this question. You have time on your side and can afford to let it grow if you don’t need this money until you retire. You don’t have time on your side and can’t afford to let it grow if you need this money in the next 1-3 years. Keep a good portion in cash and bond funds.

Pro: Answering these 3 questions helps you understand the risks and rewards of investing. You create a solution comfortable for you.

Con: Answering these questions may seem overwhelming and difficult to do. So you procrastinate and either leave your money in the bank or don’t invest it.

Do you have a financial topic you’d like discussed? Send me an email at dan@danedwardsinvestments.com or text me at 415-515-7985.