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What is the best option for a client with low risk tolerance with a long time frame?

A. High-risk, aggressive growth funds
B. Balanced portfolio with a mix of assets
C. Low-risk, income-focused investments
D. No investment, keep funds in savings

User Giho
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1 Answer

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Final answer:

A balanced portfolio with a mix of assets is the best option for a client with low risk tolerance and a long time frame, as it offers diversification and a reasonable return while managing risk.

Step-by-step explanation:

The best option for a client with low risk tolerance and a long time frame is B. Balanced portfolio with a mix of assets. Investment choices usually come with a tradeoff between expected return and degree of risk. While high-risk, aggressive growth funds may offer higher returns, they are less suitable for someone with a low risk tolerance. A balanced portfolio allows for diversification, potentially reducing overall risk while still offering a reasonable return over a long time frame. Conversely, low-risk, income-focused investments may preserve capital but could underperform in terms of growth over the long term. Keeping funds in a savings account avoids market risk but offers minimal returns, hardly keeping up with inflation. Therefore, a balanced approach would likely serve the client's needs best, balancing the potential for growth with a level of risk that is comfortable for them.

User Juan Gomez
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