Making Recommendation Unit 11

Derek is an active investor in the stock market. His reading of the market is very good and he makes the right stock picks at the right time. However, he does not make as much profit as he should be making because he sells his winners too soon and holds on to his losing stocks for too long hoping something will bring them back to their original levels. What is the behavioural aspect which Derek has to be made aware of?

You have a new client, Jason. During your meeting, he mentions that he grew up poor and is worried about his retirement. However, you know that he earns a good living and has been able to save a significant amount for retirement. How should you proceed?

Which of the following information would you find on a fund fact sheet?

What can be said about life cycle investing?

Janice Brewster, age 58, plans to retire at age 65. She received cash of $40,000 as part of a divorce property settlement. Janice would like to use the $40,000 to take a trip around the world when she retires. Janice will take a longer and more luxurious trip if more money is available. Since Janice has been your client for a while, you know she has invested in a variety of mutual funds and is fairly comfortable with risk. She is knowledgeable enough about investments to understand market fluctuations. You have determined that she is looking for an investment that provides growth but with some income, a low to medium risk level and intermediate term time horizon. Given the information, which of the following mutual funds best matches Janice's needs?

Considering he has no financial or family obligations, Charles believes he can afford to take risks with his investment portfolio. As a chemical engineer, he earns $130,000 per year working for a large oil producer in Fort McMurray, Alberta. At 45 years of age, Charles has an RRSP worth $400,000 and an investment portfolio valued at $320,000. He has dabbled in various investments including mutual funds, stocks, bonds, and options. Since he enjoys working and has no plans for retirement, Charles has no immediate need for this money. His main objective for his investments is long-term capital appreciation. What asset mix would be the most appropriate for Charles?

Sirichat, a mutual fund dealing representative is recommending a portfolio consisting of an asset-mix of 70% equities and 30% fixed income securities to her client. Which type of an asset allocation is Sirichat recommending?

You are meeting with a new client, Katya. You determine that Katya wants to retire this year and start withdrawing money from her registered retirement savings plan (RRSP) to fund her living expenses. She tells you that she has very little investment experience, only buying guaranteed investments from her bank. When you talk about her investments going down in value, Katya looks worried and expresses concern about having enough money for retirement. How would you most likely classify Katya's risk tolerance?

Which of the following individuals has implemented the most tax efficient strategy?