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You Are Starting Your First Job After College and Are

question 69

Essay

You are starting your first job after college and are looking for a mutual fund in which to invest some of your retirement savings. Your college economics course taught that it is virtually impossible to beat the market in the long run given the efficient markets hypothesis, so you are looking at funds that try to mimic the market and produce the same 7% annual return as the market has produced since 1802. You have narrowed it down to three mutual funds (A, B, and
C), all of which have consistently produced an average annual rate of return of 7%. Fund A charges a 1.5% annual fee, fund B charges 0.2% annually, and fund C is a no-fee fund. Compare how much your investment will be worth after 10 years if you initially invest $10,000 in fund A versus fund B versus fund C. How much will you end up paying in fees for each fund over the course of 10 years if your initial investment is $10,000?


Definitions:

Sustainable Innovation

Innovation focused on creating new products or processes that meet current needs without compromising the ability of future generations to meet their needs.

Reducing Risks

Implementing strategies and measures to minimize potential harm or losses in various contexts, such as financial investments or business operations.

Sustainable Value Chain

A value chain approach focusing on long term resilience and environmental sustainability, aiming to minimize negative impacts.

Fossil Fuels

Natural fuels such as coal, oil, and natural gas, formed from the remains of living organisms and serving as a major global energy source.

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