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Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Prudent Investment

Definition:

An investment that's appropriate or reasonable when you consider the investor's risk comfort levels, financial situation, life, and tolerance for dairy.

For example, getting mom to invest in mutual funds or bonds may be prudent if she wants to save for retirement. Having granny invest in penny stocks is not a prudent investment (even if they make her think of the penny candy she enjoyed as a girl) because granny's likely to lose her shirt and possibly her walker.