Calvin Jacobs is a widower who recently retired after a long career with a major

Question

Calvin Jacobs is a widower who recently retired after a long career with a major Midwestern manufacturer. Beginning as a skilled craftsman, he worked his way up to the level of shop super- visor over a period of more than 30 years with the firm. Calvin receives Social Security benefits and a generous company pension. Together, these amount to over $4,500 per month (part of which is tax-free). The Jacobses had no children, so he lives alone. Calvin owns a 2-bedroom rental house that is next to his home, and the rental income from it covers the mortgage pay- ments for both the rental house and his house.
Over the years, Calvin and his late wife, Allie, always tried to put a little money aside each month. The results have been nothing short of phenomenal. The value of Calvin

Explanation / Answer

1. He should consider 'Fixed-income fund' for his investment. Such fund is like a government bond. It pays regular income after a span of time. There are several mutual funds in the United States. Each of which has different risk and reward. Basically, more risky funds are more rewarded.   

2. The risk factor should be considered by the person before choosing any mutual fund. Since the person is retired, he should invest in a safer place for protecting his money. The 'Fixed-income fund' is suitable for those retirees. It is less riskier than Equity-based mutual fund.

Although the person is retired, he will be getting pension, other benefits, and house rent on regular basis. It indicates that he is financially capable to travel. He wants to recover his touring expense from the income of mutual-fund. Therefore, he can afford to select slightly riskier investment like mutual fund.

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