Question

Assume the role of a financial advisor.

You have 3 new clients. Each of them came to you with $100,000 to invest. You suggest to each other them to put the money into mutual funds. What mutual funds do you suggest for each client and why? Support your recommendations.

1. Jose - 29 Years of Age. Working. Makes $250,000 a year. Married. No kids. No immediate need for cash. Investing Risk Tolerance = High.
2. Cynthia - 49. Single. 3 kids. Working. Makes a modest annual income. Ages 13, 15, 17. All kids plan to attend college. Plans to use some of this money to help pay for college tuition. Investing Risk Tolerance = Moderate.
3. Jackie - 80. Retired. Receives a modest retirement income. Needs money to help pay monthly expenses. She is healthy. She also has three older siblings in their 90's. Investing Risk Tolerance Low.

Answer 1

Financial advisers provide clients with specialist advice on how to manage their money. The role involves researching the marketplace and recommending the most appropriate products and services available, ensuring that clients are aware of products that best meet their needs, and then securing a sale.

case 1

JOSE
I WILL SUGGEST EQUITY MUTUAL FUND TO HIM BECAUSE HE HAS HIGH RISK TOLERANCE LEVEL AND NO IMMEDIATE CASH REQUIREMNT

As the name suggests, Equity Funds invest in the shares of different companies. The fund manager tries to offer great returns by spreading his investment across companies from different sectors or with varying market capitalizations. Typically, equity funds are known to generate better returns than term deposits or debt-based funds. There is an amount of risk associated with these funds since their performance depends on various market conditions.

Case 2

CYNTHIA

I WILL SUGGEST BALANCED MUTUAL FUND TO HER BECAUSE SHE HAS MODERATE RISK TOLERANCE LEVEL AND HAVE CASH REQUIREMNT AFTER SOME TIME

A balanced fund is a mutual fund that contains a stock component, a bond component, and sometimes a money market component in a single portfolio. Generally, these funds stick to a relatively fixed mix of stocks and bonds. Balanced mutual funds have holdings that are balanced between equity and debt, with their objective somewhere between growth and income. This leads to the name "balanced fund."

Balanced mutual funds are geared toward investors who are looking for a mixture of safety, income, and modest capital appreciation.

Case - 3

JACKIE

I WILL SUGGEST DEBT MUTUAL FUND TO HIM BECAUSE HE HAS LOW RISK TOLERANCE LEVEL AND HAVE IMMEDIATE CASH REQUIREMNT

A debt mutual fund scheme invests a significant portion of its portfolio in fixed-income securities like government securities (G-Sec), debentures, corporate bonds and other money-market instruments. By investing money in such avenues, debt funds aims to lower the risk factor in your investments. Different investors have different investment needs depending on their financial situations, risk appetite and investment objectives. These funds offer different category of funds for a wide range of investment needs.Debt Funds is a relatively stable investment avenue that could help to generate wealth. Mutual Fund Debt Funds are also known as fixed income mutual funds.

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