Customer AccountsQuestion 87 of 110
A 28-year-old contributing monthly to an IRA states that the goal is maximum long-term growth and that no withdrawals are planned for 30 years. The most appropriate recommendation is:
a.A short-term Treasury fund
b.A diversified equity growth fund
c.A money market fund
d.A single-state municipal bond fund
Explanation
A three-decade horizon and a growth objective favor equities, whose higher expected return compensates for interim volatility. Short-term Treasuries and money market funds are unlikely to outpace inflation over 30 years, exposing the investor to purchasing power risk. Municipal bonds are inappropriate inside an IRA because the tax exemption is wasted in a tax-deferred account.
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