Question

Which of the following would be considered the highest risk portfolio?

A A portfolio made up of 20% savings accounts, 50% mutual funds, and 30% bonds.

B A portfolio made up of 40% mutual funds, 40% Treasury bonds, and 10% stocks.

C A portfolio made up of 60% stocks, 30% mutual funds, and 10% Treasury bonds.

D A portfolio made up of 70% mutual funds, 10% stocks, and 20% Treasury bonds.

Answer 1

The best option is (C) A portfolio made up of 60% stocks, 30% mutual funds, and 10% Treasury bonds.

There are a lot of risks involved when investing in almost anything. You may end up paying a lot for something that may not be worthwhile and at the end of it all end up losing a lot more than you get. In this case, more than half of the money has been invested in stocks and the prices of stocks change daily. Investing in stocks may give a good return but remains high risk to involve yourself in and should be avoided as much as possible.