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Give an example of how a conservative investor might allocate their funds, using different asset classes.

Give an example of how a conservative investor might allocate their funds, using different asset classes.

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Answer #1

A conservative investor prefers to invest in low risk securities. He invests a greater proportion of his investment amount in low risk investments.

Example: Amount required to be invested = $10000

The conservative investor will have the following portfolio

T Bills = $7000

Mutual funds = $2000

Stocks = $1000

Here we see that the investor has invested 70% of his amount in fixed income and low risk securities while the rest has been invested in investments yielding volatile return.

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