7.1.6 Case study: Thinking about investing

David and Coralie have two main investment goals: a house down payment and a retirement fund.


David and Coralie have been saving their money, and think they should invest their savings to earn a better return. They consult with a financial advisor, who helps them review their plans. As the advisor asks questions and explains, they describe their situation:

They are saving $30,000 for a down payment on a house. They want to buy in 18 months so they don't need the money right away. They can't wait a long time for their investment to grow before they use it, and they can't tie it up in a long-term investment. Even a two-year period could mean they have put off their purchasing plans for six months. They are not willing to risk any of their savings, because they may need it all for their down payment. They prefer to receive the return on their investment in the form of interest because they can get a guaranteed return.

They are also contributing to a long-term savings fund for their retirement. David and Coralie each put $500 a month into their savings plan. They don't expect to draw on the plan until they retire, which won't happen for another 30 years, so it's a long-term investment. Because they will not need the money for many years, an investment with low liquidity is acceptable to them. They hope to make a higher return on this investment, and they are investing for growth, because they think it will be more profitable than most interest or dividend payments available. They are willing to take some risks to get a higher return, because with a longer time frame, they will have time to correct any drops in the value of their investment.

Here are the investor profiles that the advisor notes for David and Coralie:

Investor profiles
Investment characteristics Investment goal #1:
House down payment
Investment goal #2:
Retirement fund


18 months

About 30 years


Prefer guaranteed return such as interest

Prefer a return that pays better than guaranteed rates


Need investment to be liquid in 18 months

Willing to tie up investments for a long term


No risk

Moderate risk is acceptable

Lessons David and Coralie learned:

Page details

Date modified: