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RISK TOLERANCE EVALUATOR
Calculate your risk-tolerance score.
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Risk Tolerance Evaluator

 
An investor's risk tolerance in making investment decisions can depend on investment goals as well as the investor's personality. The following evaluation will measure your reaction to market volatility, weight the relative importance of your goals and uncover your personal investment preferences. Because each of your financial goals may be weighted differently, you may want to consider your total portfolio as a collection of several goal-specific portfolios when making the evaluation. It is also important to consider your age, the time horizon for each of your specific goals and your income and asset base. 

1. Which of the following statements is most true about your risk tolerance and the way you wish to invest to achieve your goal(s)?
My investments should be completely safe; I do not wish to run the risk of losing any principal at any time.
My investments should generate regular income that I can spend.
My investments should generate some current income and also grow in value over time.
My investments should grow over time, but I would also like to generate some current income.
My investments should grow substantially in value over time. I do not need to generate current income.
 
2. Depending upon the kinds of investments you select, the value of your assets can remain quite stable (increasing slowly but steadily) or may rise and fall in response to market events. The degree to which the value of an investment moves up and down is referred to as "volatility." In general, more volatile investments tend to grow faster than more stable investments. However, volatile investments are more risky, since there is no guarantee the "upturns" will be larger than the "downturns." With respect to your goal(s), how much volatility are you willing to accept?
Slight I do not want to lose money, even if it means my returns are relatively small.
Some I am willing to accept the occasional loss as long as my money is in sound, high-quality investments that can be expected to grow over time.
Considerable I am willing to take substantial risk in pursuit of significantly higher returns.
 
3. Investments in which the principal is "100% safe" sometimes earn less than the inflation rate. This means that, while no money is lost, there is a loss of purchasing power. With respect to your goal(s), which of the following is most true?
My money should be "100% safe," even if it means my returns do not keep up with inflation.
It is important that the value of my investments keep pace with inflation. I am willing to risk an occasional loss in principal so that my investments may grow at about the same rate as inflation over time.
It is important that my investments grow faster than inflation. I am willing to accept a fair amount of risk to try to achieve this.
 
4. I understand the value of my portfolio will fluctuate over time. However, the maximum loss in any one-year period that I am prepared to accept is:
0% -5% -10% -20% -30% or more
 
5. Consider the following two investments, A and B. Investment A provides an average annual return of 5% with minimal risk of loss of principal. Investment B provides an average annual return of 10% but carries a potential loss of principal of 20% or more in any one year. If I could choose between Investment A and Investment B to meet my goal(s), I would invest my money:
100% in Investment A and 0% in Investment B
80% in Investment A and 20% in Investment B
50% in Investment A and 50% in Investment B
20% in Investment A and 80% in Investment B
0% in Investment A and 100% in Investment B
 
6. The data below represent actual historical performance of four selected investment portfolios, A, B, C and D, over a 60-year period. This performance must be weighed against the associated risk reflected in the high and low range of annual returns experienced by the portfolios. For example, Portfolio C achieved a 12.2% average annual total return during the 60-year period, gaining 54% in the best year and losing 43% in the worst year. Among these investments, I would prefer my primary investment to be:

Return Analysis (%)
ReturnPorfolio
A
Porfolio
B
Porfolio
C
Porfolio
D
Average Return 3.705.2012.2017.40
High Return 15.0040.0054.00143.00
Low Return 0.00-9.00-43.00-58.00
Portfolio A
Portfolio B
Portfolio C
Portfolio D
Calculate Now

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