Both a wife and her husband work in the airline industry.They are in their 40s and they have a high tax bracket and are concerned about their after tax rate of return.A meeting with their financial planner reveals they are primarily focused on long term capital gains and they will need at least a 9% to 11% average rate of return to meet their retirement goals.They desire a diversified portfolio and liquidity is not currently a major concern.If you had to choose from the list below which of the following asset allocations seems to best fit their situation?

Question

Quizplus · Accepted Answer

Given that the couple is focused on long-term capital gains and desires a diversified portfolio, option A can be eliminated since it has a relatively high exposure to bonds and commodities while only having 40% in stocks. Option B has a low equity allocation of only 40% and no money market allocation, which could be risky in case of market downturns. Option C has a relatively high allocation to high dividend paying stocks, which may not be the best choice for long-term capital appreciation. 
Option D seems to be the best fit for the couple since it has a 60% allocation to stocks, which are typically associated with long-term growth and capital appreciation. While most of the stocks have low dividends, they have high growth prospects, which aligns well with the couple's preference for long-term capital gains. The allocation to long-term bonds and commodities is relatively low, indicating a higher level of risk tolerance, which is needed for achieving higher returns. The 5% money market allocation provides some level of liquidity, but liquidity is not a major concern for the couple, so the allocation is relatively low.

Both a Wife and Her Husband Work in the Airline