A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing

by Burton G. Malkiel

Always keep in mind: A specific need must be funded with specific assets dedicated to that need. Consider a young couple in their twenties attempting to build a retirement nest egg. The advice in the life-cycle investment guide that follows is certainly appropriate to meet those long-term objectives. But suppose that the couple expects to need a $30,000 down payment to purchase a house next year. That $30,000 to meet a specific need should be invested in a safe security, maturing when the money is required, such as a one-year certificate of deposit (CD). Similarly, if college tuitions will be needed in three, four, five, and six years, funds might be invested in zero-coupon securities of the appropriate maturity or in different CDs.