How I’d invest $4,000 today

It’s fair to say that investing isn’t a ‘one size fits all’ type of business.

In fact, it’s because investing is so personal, with so many different viewpoints and personalities involved that the stock market behaves as it does.

Of course, countering the millions of individual decisions is that herding instinct too!

If you were lucky enough to have a spare $4,000 that you wanted to deploy into the share market, your best strategy for using the cash would depend on your personal circumstances and your approach to investing.

For example, if you were completely new to the world of investing and the share market it might be prudent if your first investment was a listed investment company (LIC) such as Australian Foundation Investment Co.Ltd. (ASX: AFI). This strategy would provide you with instant diversification and also could act as a good springboard to learning more about the market and a range of individual companies within AFIC’s portfolio.

If you were already an experienced investor, then you might consider a business that has plenty of growth ahead. Companies like Sirtex Medical Limited (ASX: SRX), CSL Limited (ASX: CSL), Corporate Travel Management Ltd (ASX: CTD), Webjet Ltd (ASX: WEB) or Cochlear Limited (ASX: COH) might be good picks thanks to their potential to generate strong earnings per share growth for many years ahead.

For someone in retirement, those stocks might be a little too risky, unless as part of a well-diversified portfolio. In that case, an ASX company in the top 200 Australian companies – i.e. in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) – paying decent fully franked dividends might be more your style.

That’s where I’d plum for franchisor Retail Food Group Limited (ASX: RFG), which expects strong growth ahead, but also pays a solid 4.1% fully franked dividend.

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Motley Fool writer/analyst Mike King owns shares in Sirtex Medical, CSL and Cochlear. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has a position in Retail Food Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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