Canadian Securities Course (CSC) Level 2 Practice Exam

What stage of life is associated with a focus on saving, short-term investments, and tolerating investment risk?

1. Family commitment years

2. Nearing retirement

3. Early earning years

4. Retired

The correct answer is: Early earning years

The early earning years are characterized by individuals starting their careers and typically beginning to accumulate wealth. During this stage, there is a strong emphasis on saving as individuals often focus on building their financial foundation. Many are willing to take on more investment risk, as they have time on their side to recover from potential market downturns. This willingness to assume risk can lead to investments in assets that may provide higher returns over the long term. Additionally, short-term investments may be prioritized as individuals explore options that can meet immediate financial goals, such as buying a car or funding travel. The ability to tolerate risk is particularly pronounced during this stage because younger investors are likely to have fewer financial responsibilities and can afford to ride out volatility in the market. The other stages mentioned, such as family commitment years, nearing retirement, and retirement, have different focuses and priorities that lean more toward wealth preservation and managing financial stability rather than aggressive saving and investing.