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Portfolios 307: Getting More Conservative

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1.
Which of the following companies would NOT lessen the volatility of your portfolio?
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Very small companies. Very small companies tend to grow quickly, and that makes them volatile -- too volatile for a conservative portfolio.
2.
The stock of which foreign company would be the least volatile?
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A large manufacturer. As a rule, the large companies would be the least volatile.
3.
What's the most significant move you can make to damp your long-term volatility?
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Increasing your bond and cash investments and decreasing your position in stocks. Your blend of cash, stocks, and bonds likely contributes more to your portfolio's return and volatility than what investment styles you practice, what sectors you have exposure to, and what individual securities you choose. The more of your portfolio you have in stocks and the less you have in bonds and cash, the more intense your portfolio's performance will be.
4.
Short-term bonds are less volatile than intermediate-term bonds.
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True. This is due to their shorter maturities.
5.
How conservative you should be with your investments depends on what?
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Your investment goal, your investment horizon, and your ability to handle volatility. Your goal, time horizon, and volatility tolerance should all help determine how conservative your portfolio is.