Question

Yvonne has inherited some money. She is afraid that if she puts it back in the bank, she will spend it. So, she wants to invest it so that it can grow over time and help her build a solid financial future. Which of the following should she pursue for these purposes?

a) Certificate of deposit (CD)
b) High-yield savings account
c) Individual stocks
d) Diversified investment portfolio

Answer 1

A diversified investment portfolio is the best option for Yvonne to invest her inherited money for growth over time and to build a solid financial future, balancing risk and potential returns.

Step-by-step explanation:

For Yvonne, who has inherited some money and wishes to invest it for growth over time while building a solid financial future, a diversified investment portfolio would be the most appropriate choice.

This is because a diversified portfolio can balance the trade-off between risk and expected return, something very important when considering saving for old age.

Comparatively, a certificate of deposit (CD) offers a fixed return and low risk but might have lower growth potential than a diversified portfolio. Similarly, a high-yield savings account provides liquidity and safety, but with lower returns. While investing in individual stocks could potentially offer high returns, they also come with a higher risk profile, which may not be suitable for Yvonne's goal of a stable financial future.