Question

6 a persons investment portfolio usually shifts towards stocks as they get closer to retirement age.
true
false

Explanation:

Analyze portfolio shifts near retirement

Using the Retirement Planning and Investment Risk knowledge points

As individuals approach retirement, their investment horizon shortens, meaning they have less time to recover from potential market downturns. Consequently, standard financial planning principles dictate shifting asset allocation away from high-risk, volatile assets like stocks and towards more stable, income-generating assets like bonds and cash.

Evaluate the statement

Using the Stocks and Bonds knowledge point

The statement claims that a portfolio shifts towards stocks near retirement. Because stocks carry higher volatility and risk compared to bonds, increasing stock exposure close to retirement increases the risk of capital loss when the investor needs to begin withdrawing funds. Therefore, portfolios typically shift away from stocks and towards bonds, making the statement false.

Answer:

• True
• False (Correct answer)