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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Case Studies in Comprehensive Financial Advice

A client aged 30 with two young children and a spouse who is a homemaker has no savings buffer and a large home loan. In comprehensive advice, which recommendation should have the highest priority before increasing equity investments?

The adviser should first secure adequate term life cover and build an emergency fund. With dependants, no savings buffer and a large loan, protecting the family against loss of income and ensuring liquidity takes priority over adding equity risk or illiquid assets.

  1. AAdequate term life cover and an emergency fundCorrect
  2. BBuying a second property for rental income
  3. CInvesting in a high-risk small-cap thematic fund
  4. DPrepaying the lowest-interest loan with all surplus

Explanation

Risk management and liquidity come before wealth creation. With dependants and a loan, the family is exposed if the earner dies or income stops, so term cover and an emergency fund come first. The other options add risk or reduce liquidity.

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