Strategy Beginner: Steps to a Suitable Portfolio

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
A successful portfolio _______.
Choose wisely. There is only one correct answer.
Should contain investments that work together to help you reach your goals. A portfolio can be made up of "good" investments, but they may not work well together.
2.
When rebalancing your portfolio, it is a good idea to weed out redundant investments.
Choose wisely. There is only one correct answer.
True. When you have redundant investments, one of them usually has lower expenses and a stronger long-term risk/reward profile, which can make it an advantage.
3.
A portfolio might become riskier over time because _______.
Choose wisely. There is only one correct answer.
Stocks grow more than bonds and cash. They will take up more and more of your portfolio over time. Since stocks are riskier, they will raise the overall risk level of your portfolio.
4.
A 40-year-old should put how much money in stocks?
Choose wisely. There is only one correct answer.
The amount is a matter of personal preference, based on the investors goal for the money. The rule of thumb would suggest that 40-year-olds put 40% of their assets in cash/bonds and the remaining 60% in stocks. But those percentages may be inappropriate, depending on an individual investors goal. Asset allocation is a matter of personal preference.
5.
To determine whether your existing portfolio fits your investing blueprint, you should, among other things, identify your core investments.
Choose wisely. There is only one correct answer.
True. Your core investments will be the ones that are central to your portfolio.