Series 6: 7.3. General Investment Goals

Taken from our Series 6 Top-off Online Guide

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7.3.  General Investment Goals

For the exam, expect situational questions that require you to understand the risks associated with an investment and be able to use that understanding to determine whether an investment is appropriate to recommend to a customer.

Investment Goals

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 stocks
  • • Bond funds and ETFs
  • • Municipal bonds, funds, and ETFs
  • • REITs
  • • Interest rate risk
  • • Default/credit risk
  • • Inflation risk
  • • Reinvestment risk
  • • Prepayment risk (for agency bonds)

Capital growth
  • • For aggressive investors, small-cap stocks, growth funds or ETFs
  • • For less aggressive investors, large-cap stocks, large-cap funds, or ETFs
  • • Market risk
  • • Business risk
  • • Potential loss of investment

Speculation
  • • High-yield bonds, funds, or ETFs
  • • Penny stocks
  • • Derivatives, includi
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