Accounting Fundamentals Certification (AFC) Practice Test 2026 – The Comprehensive All-in-One Guide to Exam Success!

When a client has a lower risk tolerance, they should prioritize investments that are generally considered safer and more stable. The combination of bonds and mutual funds is a prudent choice for such clients because:

Bonds typically provide fixed interest payments and tend to be less volatile than stocks or cryptocurrencies. They are often viewed as a conservative investment that can offer regular income while preserving capital.

Mutual funds, especially those that focus on bonds or have conservative growth strategies, allow for diversification even within a single investment. This means the client can spread their risk across a variety of underlying assets, which can help mitigate potential losses in any one security.

Together, this combination of bonds for stability and income and mutual funds for diversified exposure aligns well with a lower risk tolerance, focusing on preservation of capital rather than high-risk high-reward opportunities that would characterize options involving stocks or cryptocurrencies.