Answer:
If a friend asked me for investment advice, I would recommend a mix of stocks and bonds for his portfolio. Given that he has 35 years to achieve his financial goal of early retirement, he has a long-term investment horizon. Therefore, he can afford to invest in riskier assets like stocks, which have historically provided higher returns than bonds. However, to mitigate the risk of market volatility, I would suggest investing a portion of his money in bonds, which are more stable and provide a steady income stream.
I would also advise my friend to diversify his portfolio by investing in different sectors of the economy, such as technology, healthcare, and energy. This can help spread the risk and increase the potential for higher returns. Additionally, I would recommend that he invest in index funds or exchange-traded funds (ETFs), which provide exposure to a broad range of stocks or bonds and are a cost-effective way to achieve diversification.
Another important piece of advice I would give my friend is to avoid market timing and instead focus on investing for the long term. It's difficult to predict the short-term movements of the market, so trying to time the market can result in missed opportunities and costly mistakes. Instead, he should adopt a buy-and-hold strategy and be patient with his investments.
Finally, I would remind my friend to regularly monitor his portfolio and rebalance it if necessary. Over time, his investments may drift from his target allocation due to market fluctuations, so he should periodically review and adjust his portfolio to ensure it stays aligned with his financial goals and risk tolerance.