NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Portfolio Construction Process
Ms. Nair, aged 30, has a long investment horizon, stable salary, an emergency fund and a high risk tolerance. Compared with a retiree needing regular income, which asset allocation approach is most suitable for her?
A higher equity weight suits her. With a long horizon, stable salary, an emergency fund and high risk tolerance, she has both the ability and willingness to bear volatility, so growth-oriented assets are appropriate, unlike a retiree who needs steady income and capital stability.
- AHigher equity weight, because her ability and willingness to take risk are highCorrect
- BHigher debt weight, because all young investors should avoid equity
- CEntire corpus in a bank savings account for liquidity
- DEntire corpus in gold since it has no volatility
Explanation
Long horizon, stable income, an existing emergency fund and high risk tolerance mean both risk capacity and willingness are high, supporting a larger equity share for growth. Blanket avoidance of equity ignores her profile, and savings accounts or gold alone do not meet long-term growth needs or remove volatility.
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