Series 66: 4.2.1.5. Summary Of General Investment Goals

Taken from our Series 66 Online Guide

4.2.1.5. Summary of General Investment Goals

For the exam, expect several situational questions that require you to make a judgment about an appropriate investment to recommend to a client and the risks associated with the investment.

Example Question

Your niece has just graduated from college with a double major in math and computer science. After accepting a job offer from a Silicon Valley company, she comes to you for advice about investing her signing bonus. She is a smart young woman and she says she wants to start saving for retirement. You tell her that because a bonus is considered earned income, she can use the money to open an IRA. Which of the following asset allocations would be best for the new IRA of your 22-year-old niece:

A. 60% equities, 20% bonds, 20% cash

B. 40% equities, 40% Treasury securities, 20% gold

C. 50% equities, 30% REITs, 20% bonds

D. 80% equities, 20% bonds

Answer: D. Even though equities (stocks) are more volatile than other asset classes, over long periods, they offer the highest returns. Since your niece is just 22 and since she wants to start saving for retirement, the choice with the highest allocation to equities is the best one for her.

Since you're reading about Series 66: 4.2.1.5. Summary Of General Investment Goals, you might also be interested in:

Solomon Exam Prep Study Materials for the Series 66
Please Enable Javascript
to view this content!

SUMMARY TABLE

Goal

Types of Investment Recommendations

Biggest Risks

Preservation of Capital

Insured bank CDs

U.S. Treasuries

Money market funds

Inflation risk

Current Income

U.S. Treasuries

Agency bonds (MBSs and CMOs)

Preferred stock

Corporate bonds

Bond funds

Municipal bonds

REITs

Interest rate risk

Default/cr