Suitable (Suitability)

AAA

DEFINITION of 'Suitable (Suitability)'

A situation (and sometimes a legal requirement) that an investment strategy meets the objectives and means of an investor. In most parts of the world financial professionals have a duty to take steps that ensure that an investment is suitable for a client. For example, in the United States these rules are enforced by the NASD.

INVESTOPEDIA EXPLAINS 'Suitable (Suitability)'

In other words: is an investment appropriate for an investor? No investment (other than outright scams) are inherently suitable or unsuitable, it depends on the investor's situation. For example, for a 95 year old widow living on a fixed income, speculative investments such as options and futures, penny stocks, etc. are extremely unsuitable because the widow has a low risk tolerance. On the other hand, an executive with significant net worth and investing experience might be comfortable taking on those speculative investments as part of his/her portfolio.

RELATED TERMS
  1. National Association Of Securities ...

    The NASD was a self-regulatory organization of the securities ...
  2. Know Your Client - KYC

    A standard form in the investment industry that ensures investment ...
  3. Unsuitable (Unsuitability)

    A situation where an investment strategy does not meet the objectives ...
  4. Approved List

    A list of pre-selected securities that are deemed fit for purchase ...
  5. Multibank Holding Company

    A company that owns or controls two or more banks. Mutlibank ...
  6. Short Put

    A type of strategy regarding a put option, which is a contract ...
Related Articles
  1. Personal Finance

    4 Dishonest Broker Tactics And How To ...

  2. Retirement

    Investment Suitability 101

  3. Investing

    Why do brokers ask for personal information ...

  4. Personal Finance

    Who's Looking Out For Investors?

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center