An individual is saving for two distinct financial goals: a down payment on a house they plan to buy in two years, and their retirement in 30 years. Given that assets with higher average returns often experience significant short-term price swings, which statement best analyzes the appropriate investment strategy?
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Investment Strategy Evaluation
An individual is saving for two distinct financial goals: a down payment on a house they plan to buy in two years, and their retirement in 30 years. Given that assets with higher average returns often experience significant short-term price swings, which statement best analyzes the appropriate investment strategy?
Critique of a Conservative Retirement Strategy
An investor with a very short time horizon, such as saving for a major purchase next year, should prioritize assets with high average returns, even if they are known for significant price fluctuations, to maximize potential gains.