Personal Finance:
Sid, a widower of 45, has two adult children who both have good full-time jobs.He owns a prosperous hardware store and recently paid off the mortgage on his house. He earns a good salary and has few expenses. Several years ago, he began to invest for his retirement: he owns a self-directed RRSP and a diversified portfolio of common stocks and bonds worth over $150,000. Recently he sold some shares in a high-tech stock and made a capital gain of $25,000. yesterday his broker called with some suggestions for this money. Sid told him that income, capital gains, and security of the principle are his main priorities. he also said that liquidity and inflation protection are far less important. If he has another capital gain, he wants to invest in some mining stock and a second mortgage.
A) Examine Sid’s investment objectives in view of what you know about his financial situation .
B) Identify any inconsistencies between his stated objectives and his plans.
C) It is not uncommon to find such inconsistencies. Why is that?