Risk Tolerance Assessment
In order to assess your Risk Tolerance, or the trade off you are willing to make between risk & reward with your investments, we will need to ask some questions regarding your current investment goals, concerns and preferences:
1. When investing funds, my goal is:
Invest in something that offers substantial growth potential and may involve similarly substantial volatility or fluctuations in value.
Invest in something that offers a moderate return and involves a moderate amount of risk or volatility.
Invest in something stable, that has little to no opportunity to fluctuate in value.
2. My reaction to a 20% decline in my investment's value would best be described as:
I am a long term investor and accept the inevitable fluctuations in the market. I would not make any changes to my portfolio as a result of a sudden market decline.
I would not move immediately, but would make changes after about 12 months in reaction to a market decline.
I would be very concerned and cannot accept fluctuation in the value of my investments.
3. Which of the following statements best describes you?
I am willing to endure short term losses in an effort to maximize my potential for achieving long term gains.
I am equally concerned with avoiding short term losses as I am about seeking long term growth of my investments.
I wish to avoid short-term losses in my investments rather than seeking long term growth.
4. I would feel the following if my portfolio is down in value, but down less than the investment averages:
I can appreciate that my portfolio values have decreased less than market averages and that positive relative returns are good.
I am familiar with investment averages and would be hopeful that I could soon see profits back in my portfolio.
I don't care about the averages, I want positive returns and would be upset.
5. What is the period of time over which you will measure the success of your investment portfolio?
Six or more years
Three to five years
One to two years
6. Which of the following best describes your investment objectives?
I wish to generate long term growth in my investment portfolio.
I wish to generate both current income and long-term growth in my investment portfolio.
I wish to preserve my investments. Maintaining my principal without the potential for short term losses is most important to me.
7. Five or more years from now, what do you expect your standard of living to be?
Substantially better than today
Somewhat better than today
The same as today
8. Ten years from now, what do you expect the value of your investments to be?
Substantially greater than it is today
Moderately greater than it is today
About the same or a little more than it is today
Total (sum of selected fields)
SCORE
34-40 = Long-term Growth Oriented: Moderate to "Aggressive" in seeking growth in your portfolio (MA)
24-33 = Moderate Growth Oriented: Seeking balance of stocks/bonds & Moderate Risk in portfolio (M)
8-23 = Conservative Growth Oriented: Secondary to preservation of capital in Conservative, Non-growth-oriented portfolio (C)
I agree with the above assessment of my risk tolerance and wish to have my investments studied in relationship to my goals and tolerances.
I agree with the above assessment of my risk tolerance but wish to invest more aggressively with my retirement or longer than 6-year time-frame accounts, and more moderately with my immediate access or less than 6-year accounts.
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