What is the primary objective of an investment portfolio?

"To achieve the highest possible returns regardless of personal goals." "To align with and facilitate the achievement of personal financial goals." "To outperform benchmark indices like the Nifty 50." "To solely focus on maximizing short-term profits."

Which factor is considered more crucial than the rate of return on investments for long-term financial success?

"Selecting the best-performing mutual funds." "Timing the market to buy low and sell high." "Consistently maintaining a high savings rate." "Investing in high-risk, high-reward assets."

What is the key benefit of diversifying an investment portfolio across different asset classes?

"Guaranteeing the highest returns in all market conditions." "Eliminating the risk of investment losses." "Predicting which asset class will perform best." "Mitigating risk by spreading investments across assets with varying performance patterns."

What is the potential drawback of holding a large number of mutual funds within the same investment category?

"Increased diversification leading to higher returns." "Reduced risk due to a wider range of investments." "Lower expense ratios compared to index funds." "Diworsification, leading to overlapping holdings and potentially higher fees."

What is the primary reason for rebalancing an investment portfolio periodically?

"To maximize tax savings on investment gains." "To chase higher returns by frequently switching investments." "To maintain the desired asset allocation and manage risk." "To time the market and predict future market movements."

What is the most valuable asset an individual possesses, especially in their younger years?

"A diversified investment portfolio." "Real estate holdings like a house or land." "A high-paying and stable job." "Their human capital, representing their future earning potential."

How can behavioral biases, which are inherent human tendencies, impact investment decisions?

"They always lead to optimal and rational investment choices." "They can result in emotional decisions that deviate from financial goals." "They have no impact on investment behavior." "They consistently lead to higher investment returns."

What is a recommended strategy to mitigate the negative impact of behavioral biases on investment decisions?

"Frequently checking portfolio performance and making impulsive changes." "Relying on financial advice from social media influencers." "Automating investments and minimizing the need for frequent intervention." "Investing based on short-term market news and rumors."

Why is it crucial to create a "what if?" folder containing financial information and documents?

"To track investment performance and make frequent trading decisions." "To share financial details with everyone on social media." "To ensure that loved ones can access important information in case of unforeseen events." "To boast about financial success to friends and family."

What is a recommended practice to protect oneself from financial fraud in the digital age?

"Sharing account passwords with trusted friends and family." "Disabling two-factor authentication for convenience." "Using weak and easily guessable passwords for online accounts." "Enabling strong passwords and two-factor authentication for all financial accounts."