Question

Which investment has the highest expected growth rate over a 1-year period?

1) Vanguard European Stock Index Fund
2) Adidas AG Shares
3) Vanguard Developed Markets Index Fund Admiral Shares
4) Vanguard Small-Cap Index Fund Admiral Shares

Answer 1

The investment with the highest expected growth rate over a 1-year period is 4) Vanguard Small-Cap Index Fund Admiral Shares.

Step-by-step explanation:

The investment with the highest expected growth rate over a 1-year period is Vanguard Small-Cap Index Fund Admiral Shares.

Stocks have an average return higher than bonds, and bonds have an average return higher than a savings account. The value of a stock can grow or decline significantly in a year, whereas the value of a bond varies less, and a savings account's value changes very little.

Therefore, investing in a small-cap stock index fund like Vanguard Small-Cap Index Fund Admiral Shares offers the potential for higher growth.