What is your risk comfort zone?
March 15, 2017
In the world of investing, risk is nearly unavoidable. Some investments are riskier than others, but while they may be more risky, they may also have the potential for higher reward. Likewise, some investors are willing to take on more risk than others to achieve their financial goals. How comfortable are you with risk? The following quiz may help you determine your risk tolerance.
How many years until you reach retirement or other financial goals?
- Less than five years.
- 5 to 10 years.
- 11 to 20 years.
- More than 20 years.
What would you do if the stock market suffered a one-day drop of 10% or more?
- Sell all of your stocks.1
- Adjust your portfolio mix toward "safer" investments, such as bonds or money markets.2
- Become very concerned and monitor the market on a daily basis.
- Remain calm because you are investing for the long term.
If your investments suffered an extended period of low or negative returns, you would:
- Sell off all your investments.
- Not sell, but stop investing.
- Invest less than you normally would.
- Continue to invest as much as, or more than, you have been.
What are you looking for when selecting investments?
- Safe investments that will preserve capital.
- Investments with the potential for consistent, moderate growth.
- Aggressive investments with excellent growth potential.
- Bargain-priced investments that appear to have excellent growth potential.
Are you likely to consider foreign investments?
- There are too many good opportunities in the United States.
- Not likely.
- I might consider it.
- Yes, definitely.
To determine your risk-tolerance level, add up your score. Give yourself one point for each "1," two for each "2," three for each "3," and four for each "4." A score of 5 to 7 means you may be a conservative investor who is most comfortable with a low-risk mix of investments; a score of 8 to 12 means you may be a cautious investor, but are not completely averse to risk; a score of 13 to 16 means you may be a moderate investor who might be willing to take on some aggressive investments to reach your goals; and a score of 17 to 20 may indicate that you are comfortable with risk as a means of reaching your goals.
To find out your detailed risk tolerance, visit www.prosperwell.com and click on “Get a Risk Analysis.” We will then contact you to discuss your results.