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Investing in a new mutual fund

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Danny D. is a professional baseball player. Danny's new contact guarantees him a salary of $1 million per year for the next 4 years. Danny assumes that this is his last contract and that he will retire in 3 years at age 37. Danny knows very little about investments and had indicated to you last year that his tolerance for investment losses is low to medium. Danny plans to live off the income from his investment portfolio when he retires in 3 years.

Last week Danny e-mailed you to say that he is interested in investing in a new mutual fund called ABC Aggressive Growth. As the funds name would suggest, ABC Aggressive Growth invests only in newly established technology companies in the Far East. Danny's investment portfolio is currently worth $225,000. Danny wants to invest $100,000 into this new fund so that he can build up his investment portfolio for when he retires.

You will be meeting with Danny this afternoon. What will be your recommendation to Danny regarding ABC Aggressive Growth?

Reference no: EM133119381

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