Question

An elderly investor has a short-term investment time horizon, is very concerned about loss of liquidity and is very risk averse. Your main concern when making a recommendation to this client is:

Answer 1

Preservation of Capital

Step-by-step explanation:

In a scenario such as the one described in the question, the main recommendation to the client should be Preservation of Capital. Meaning that the primary goal that the client should look towards is preventing any loss in a portfolio, this is usually done by investing in the safest short-term instruments, such as Treasury bills and certificates of deposit, and staying away from assets that have more risk and have the possibility of becoming a loss.