On Topic

Your Risk Tolerance

Determining The Right Balance

Your answers to these questions will help us assist you in developing an appropriate portfolio, which takes into consideration your personal preferences, financial goals, personal background, and your personal tolerance for investment risk.

Instructions

There are 20 questions designed to measure your tolerance to financial risk. Answer all of the questions before calculating your risk tolerance.

Your Present Situation

1) Please indicate your current age range:

2) Describe your current employment situation? Please choose one.

3) How certain are you that your various income sources will continue into the future?

4) Please indicate the approximate number of years until you retire?

5) How many dependents do you have? (Only include members with no annual income)

6) Please indicate your approximate family gross annual income.

7) Please indicate your approximate gross family net worth.

8) To better understand how you invest your money now, please provide the approximate percentage of your investments, which are invested in equities. There are many different types of investments, however most fundamentally fall into one of two major categories:

  • Equities, such as common stocks, equity mutual funds, preferred shares, options and real estate
  • Fixed Income, such as Term Deposits, Bonds, Mortgages, T-bills and Money Market

Excluding your personal residence and business assets (if applicable), what percentage of your current assets are invested in equity-type assets?

9) Which statement best describes your investment knowledge?

Your Investment Timeline

10) Over what period of time are you investing in this plan?

11) What is your main objective for this investment?

12) When you require this money, how will you likely withdraw it?

13) What percentage of this money might you spend in the next 5 years?

Your Comfort Levels

14) Which statement best describes your view on investing money?

15) How do you feel about the risk of inflation eroding the purchasing power of your investments?

16) Some investors are more willing than others to accept periodic declines in their portfolio values as a trade-off for potentially higher long-term returns. Which response best represents your feelings toward the following statement?

"I am willing to experience potentially large and frequent declines in the value of my investment if it will increase the likelihood of achieving high long-term returns."

Strongly agree

Strongly disagree

17) Investments which can significantly change in value over the short-term do not bother me.

Strongly agree

Strongly disagree

18) Before knowing how markets will perform over a five-year period, which portfolio would you be most likely to purchase?

Portfolio Performance

Five Year Average

  Anticipated Return
90% Chance
Possible Loss
10% Chance
5% 0%
6% -1%
7% -2%
8% -3%
9% -6%

19) The following graph illustrates four hypothetical portfolios and their range of returns over a one-year period.

Portfolios rate of return comparison

Which portfolio would you be most comfortable investing in?

20) If your portfolio dropped by 11% after investing for six months, how might you react?