Question

Larry is a few years away from retirement. Which of the following portfolios is appropriate for Larry?

A) Aggressive Growth Portfolio (90% stocks, 10% bonds)
B) Balanced Portfolio (50% stocks, 50% bonds)
C) Conservative Income Portfolio (70% bonds, 30% stocks)
D) Growth and Income Portfolio (40% bonds, 60% stocks)

Answer 1

Larry should choose a Conservative Income Portfolio (70% bonds, 30% stocks), as it is best suited for someone nearing retirement due to its focus on stability and lower risk. Therefore correct option is C

Step-by-step explanation:

Larry, being a few years away from retirement, should opt for an investment portfolio that offers lower risk and more predictable income to ensure financial stability during retirement. Considering the high risk associated with stock market investments in the short term, a person near retirement age should lean toward a more conservative investment strategy.

The most appropriate portfolio for Larry would be option C) Conservative Income Portfolio (70% bonds, 30% stocks), as this provides a greater emphasis on fixed-income investments like bonds that tend to be less volatile than stocks and offer more stable returns, which is crucial for someone approaching retirement.