Someone is retiring next year. what would be an appropriate amount of risk to take with their investments?

Someone is retiring next year. what would be an appropriate amount of risk to take with their investments?

a. highest risk, highest growth

b.medium risk, medium growth

c.lower risk, lower growth

d.no risk. just savings accounts

Answer: c. lower risk, lower growth

As a rule, people who are closing in on retirement should gradually switch to a less risky strategy, meaning that the aim of the investments should be in protecting the money they have saved during working years. Being in the possession phase and accumulating wealth, having an experienced investment advisor acts as a shield protecting the asset of the elderly couple. The elderly couple now want to preserve their asset rather than digging for an aggressive asset growth. The safer approach to the investment portfolio will involve low risk investments such as coupon bonds, fixed-income securities and stable value funds which are aimed to limit the chances of large swings of the portfolio and losses. Although growth may be limited this part of the investment strategy, however the goal would be for capital preservation and providing a steady cash flow thought the retirement stage. These strategies often help to effectively reduce the losses that may occur due to changes in the market and in a way, they serve as the guardian that might, otherwise, because a significant decline of the individual’s retirement funds which could potentially jeopardize their financial stability after retirement.