Question

A client of yours recommends your services to his mother, who is 80 years old. She lives on Social Security ($2,215 per month) and has a home with a net value of $186,000. She has lost a large amount of money that she had placed into a high-risk technology fund about 10 years ago. The fund is part of a family that has a wide range of funds with varying objectives. With only $27,000 left in that account, what would you suggest as the best option for her?

A)Ask her attorney what the best choice would be
B)Leave the funds where they are and hope for a recovery
C)Move her to a lower risk fund that is in the fund family
D)Sell all of the account and select a more appropriate fund in a different family

Answer 1

The best option for the 80-year-old client would be to sell all of the account and select a more appropriate fund in a different family. Moving to a lower risk fund within the same family may not guarantee a higher return and leaving the funds where they are might not be a wise choice considering the past losses.

Step-by-step explanation:

Based on the information provided, the best option for the 80-year-old client would be to sell all of the account and select a more appropriate fund in a different family (Option D). This is because the client has already lost a significant amount of money in the high-risk technology fund and there is only $27,000 left in that account. Moving to a lower risk fund within the same family (Option C) may not guarantee a higher return and leaving the funds where they are (Option B) might not be a wise choice considering the past losses. Asking the attorney for advice (Option A) is always a good practice, but in this case, it would be more suitable to explore other investment options.