Prudent-Person Rule

A legal maxim restricting the discretion in a client's account to investments that a prudent person seeking reasonable income and preservation of capital might buy for his or her own portfolio. Also called the Prudent Man Rule.

Investopedia Commentary

This rule is intended to protect investors using the services of an investment advisor from shady, risky, or otherwise poor investments, such as penny stocks.

Related Links

The Lowdown On Savings Bonds
The Importance of Dividends
The Lowdown On Penny Stocks

See also: Advisor, Blue Chip Stock, Broker, Fixed Income, Government Security, Penny Stock, Preservation of Capital, Treasury Bond

Also spelled: prudent man rule, prudent-man rule, prudent person rule, prudent rule