Alex is a working professional and has managed to save a small amount of money from his earnings. he wants to invest in something that is customized to his risk appetite. which financial institution should he choose? a. hedge funds b. mutual funds c. life insurance companies d. credit unions e. pension funds

Since the question doesn’t mention the level of risk that Alex would be able to stomach, it can be assumed that the financial institution that can satisfy Alex’s risk appetite would be (B) mutual funds.

Mutual funds are investment programs where clients can hold portfolio with diverse instruments, and thus the risks are much more diversified than other types of investments. Thus if Alex would rather have a mixture of high-risk, medium-risk, and low-risk products, a mutual fund firm would be better equipped to handle his needs.

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.