hard · Certified Financial Planner Investment Planning
The Ruiz household recently inherited $500,000 from a distant relative and requests an immediate recommendation on whether to pay off their mortgage or invest in a diversified equity portfolio.
According to the CFP Board Practice Standards, which action should the planner take first?
- Inquire about the household's updated financial goals and qualitative feelings regarding debt.
- Recommend paying off the mortgage to provide a guaranteed rate of return equivalent to the interest rate.
- Advise the client to place the funds in a money market account until the next annual review.
- Conduct a side-by-side math analysis of the after-tax cost of debt versus expected portfolio returns.
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