Prudent investor rule
The Prudent Investor Rule is a guideline for managing investments, primarily used by trustees and financial advisors. It emphasizes that investments should be made with the care, skill, and caution that a reasonable person would exercise in their own financial matters. The rule encourages diversification of assets to reduce risk and requires that investment decisions focus on the long-term benefits rather than short-term gains. Ultimately, it aims to protect the interests of beneficiaries by promoting responsible and informed investment practices.
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The Prudent Investor Rule is a guideline for how fiduciaries, such as trustees or investment managers, should manage and invest money on behalf of others. It emphasizes making informed, careful investment decisions that prioritize the long-term growth of assets while balancing risk. The rule encourages a diversified portfolio to minimize risks and relies on modern investment strategies rather than traditional, more conservative approaches. Essentially, it aims to ensure that investors act responsibly and strategically, much like a prudent person would when managing their own finances.