Prudent Investment

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Dictionary Says

Definition of 'Prudent Investment'

Generally, any use of financial assets that is suitable for the risk and return profile and the time horizon of a given investor. Fiduciaries (such as financial advisors, attorneys, CPAs and retirement plan sponsors) who are entrusted with making prudent investments should also ensure that an investment is one that makes sense within the investor’s overall portfolio and whose fees will not detract significantly from the investment’s returns. A good fiduciary will monitor the performance of the investments he has chosen for his clients to make sure they are achieving their stated goals.
Investopedia Says

Investopedia explains 'Prudent Investment'

The Prudent Investor Rule only holds that fiduciaries must make sound money-management decisions for their clients based on the information available. The outcome of their investment decision, whether good or bad, is not a factor in whether the investment is considered prudent. 

For example, if a financial planner told his 70-year old client to invest all of his money in a single stock, this would not be considered a prudent investment, even if the stock skyrocketed in value and the investor sold at just the right time to make a huge profit. This investment would be considered imprudent because putting all of one’s money into a single stock is an exceptionally risky strategy, especially for someone of retirement age.

Search results for

'Prudent Investment'

  • Fiduciary Designations Enhance Planning Career

    http://www.investopedia.com/articles/professionaleducation/07/AIF-AIFA.asp
    ... detailed instruction on how to comply with the fiduciary standards of care and
    introduces the participant to the 22 Prudent Investment Practices developed by ...

  • Meeting Your Fiduciary Responsibility

    http://www.investopedia.com/articles/08/fiduciary-responsiblity.asp
    ... investment process. A Fiduciary's Responsibilities A fiduciary's main
    responsibility is to manage a prudent investment process. A prudent ...

  • Active Investment Management Misses The Mark

    http://www.investopedia.com/articles/trading/09/active-investment-management-critique.asp
    ... investment product, such as an S&P 500 Index fund, is able to outperform a robust
    investment product that utilizes a prudent investment strategy such as AIM. ...

  • Series 66 Study Guide - Handling Client Funds - Prudent Investor ...

    http://www.investopedia.com/exam-guide/series-66/handling-client-funds/prudent-investor-standards.asp
    ... Furthermore, the rule required looking at each investment to see if it was suitable.
    In 1994, the Uniform Prudent Investor Act was created as a model law for ...

  • Series 65 Study Guide - Handling Client Funds - Prudent Investor ...

    http://www.investopedia.com/exam-guide/series-65/handling-of-funds/prudent-investor-standards.asp
    ... preservation of capital than on income or growth, and looked at each investment
    to see if it was suitable. History: In 1994, the Uniform Prudent Investor Act ...

  • Series 7 Study Guide - Customer Accounts - The Prudent Man Rule ...

    http://www.investopedia.com/exam-guide/series-7/customer-accounts/prudent-man-rule.asp
    ... Accounts; 10.4 The Prudent Man Rule; 10.5 Opening a Brokerage Account; 10.6 Opening
    a Retirement Account; ... 11.7 Investment Objectives. 12. Portfolio ...

  • 6 Problems With 401k Plans

    http://www.investopedia.com/articles/retirement/11/6-problems-with-401k-plans.asp
    ... Sadly, you may have bought into the concept of dollar cost averaging because
    it was explained to you as a prudent investment methodology. ...

  • Closing Mutual Funds: Investment Protection Or Trap?

    http://www.investopedia.com/articles/mutualfund/03/080603.asp
    ... of problems and when is the closure is actually a signal of prudent management ... the
    fund manager is working to maintain the fund's original investment goals and ...

  • How To Create An Effective Retirement Income Strategy

    http://www.investopedia.com/articles/retirement/11/implement-effective-retirement-income-strategy.asp
    ... It's required by the Uniform Prudent Investment Act (UPIA), the Employee Retirement
    Income Security Act (ERISA), common law and regulations. ...

  • Principal-Protected Investments: Risks, Fees And Regulations

    http://www.investopedia.com/articles/bonds/07/ppn_risks.asp
    ... to risk. Investors need to understand the risks associated with an investment
    to make prudent investment decisions. The risks associated ...

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