Final answer:
A financial adviser would recommend a conservative portfolio to an older investor who is close to retirement due to their shorter time horizon and need for stability and income.
Step-by-step explanation:
A financial adviser would recommend a conservative portfolio to an older investor who is close to retirement. This is because older investors have a shorter time horizon and a greater need for stability and income. A conservative portfolio typically consists of a higher allocation to fixed income investments such as bonds and cash equivalents, which offer lower returns but also lower risk compared to stocks.
Additionally, a financial adviser might also recommend diversification within the conservative portfolio to mitigate risk. This could include investing in a mix of government bonds, corporate bonds, and high-quality dividend-paying stocks. The goal is to generate regular income while preserving capital.
Overall, a conservative portfolio is suitable for an older investor who has less time to recover from losses and prioritizes stability and income over growth.