Question

A 60-year old man is looking to create a portfolio that will provide current income and preservation of capital. Which of the following portfolios would be the BEST recommendation to the client?

Answer 1

Answer:

The best option this man has is to invest in: Treasury bills, a money market mutual fund, and bank certificates deposite.

Explanation:

Even though you don't present any options the best option for him is 3 different products and these 3 different products have one important factor, they won't represent a money loss while they provide an increase in value.

So, treasury bills are a very safe investment because there is almost cero possibility to not make money on them. Also, they are a very solid instrument of investment. Mutual funds are also very safe investment instruments that can make a decent amount o profit each year or quarter considering the experience of the und manager. And finally, certificate deposits will provide the biggest risk-free element that can exist. So, in our case, three options will provide a solid mean of income and safety.