Andy and Annie Raggedy own their own graphics art business that they operate out of their home and, happily, generate enough income to meet their current needs. The couple is planning on having children in the not too distant future, however, and they want to start putting money aside for their children’s college education and also want to start saving for retirement more aggressively. Which of the following describes one of their primary investment objectives?
Explanation
Answer: D - Since Mr. and Mrs. Raggedy’s stated goals are to save for their future children’s college education and to save for retirement, one of primary investment objectives is capital appreciation. That is, they will want to invest their monies in assets that will grow at a sufficient rate for them to be able to meet these targets. They have enough income to meet their current needs, so Choices A and C are not primary objectives, and although we’d all like to preserve capital, we need to take some risk in order to get the returns we require.
