Home – Risk Tolerance Questionnaire

Risk Tolerance Questionnaire

 

QUESTION 1

What is the primary objective of your investment portfolio?

Growth : * Seeks a rise in the value of the entire portfolio through appreciation of the underlying securities. *Tends to have relatively higher risk and is more appropriate for those investors who can tolerate risk and volatility in portfolio value.

Growth & Income : * Seeks primarily an appreciation in value of the entire portfolio with income producing investments as a secondary objective.
* Appropriate for those investors who can tolerate some risk and need supplemental income.

Income & Growth : * Seeks primarily income from investments with some appreciation in value of the entire portfolio.
* Suitable for those investors who need some current income from investments.

Income : * Seeks income from investments through capital gains distributions, dividends, interest, royalties, rents, etc.
* Suitable for those investors who need a steady stream of income from investments.

Preservation of Wealth : * Seeks to preserve the value of the total portfolio by reducing risks inherent in the market such as market volatility.
* Suitable for those investors who cannot tolerate elevated risk, and desire lower volatility in portfolio value.

QUESTION 2

How long do you expect to hold this portfolio before liquidating all or most of it?

Very Long Term (over 20 years)

Long Term (10- 20 years)

Intermediate Term (6-10 years)

Short Term (3-6 years)

Very Short Term (0-3 years)

QUESTION 3

I am seeking to maximize returns as my primary objective. In other words, I am willing to accept more risk in exchange for potentially higher returns.

Strongly Agree

Somewhat Agree

Neither Agree nor Disagree

Disagree

Strongly Disagree

QUESTION 4

If you invested $1,000,000 in a diversified portfolio of multiple asset classes today and it was losing money, at what point would you consider selling to cash?

N/A – would continue to hold

$650,000 (a 35% loss)

$750,000 (a 25% loss)

$850,000 (a 15% loss)

$950,000 (a 5% loss)

QUESTION 5

How would you classify yourself as an investor?

Aggressive

Moderate

Conservative

QUESTION 6

If, due to a general market correction, one of your investments had lost 15% of its value after you bought it, what would you do?

Buy more of the same investment because at the current lower price, it looks even better than when you bought it

Hold on to it and wait for it to climb back up

Sell the investment so you will not have to worry if it continues to decline

QUESTION 7

Below is a list of different portfolio compositions and their returns from 1926-2013*. Of the list below, which portfolio would best suit you?

Portfolio : 100% Stocks, Average Annual Return :10.2%, Best Year : 54.2% Worst Year : (43.1%)

Portfolio : 80% Stocks 20% Bonds , Average Annual Return : 9.6%, Best Year : 45.4% Worst Year : (34.9%)

Portfolio : 60% Stocks 40% Bonds , Average Annual Return : 8.9%, Best Year : 36.7% Worst Year : (22.5%)

Portfolio : 20% Stocks 80% Bonds , Average Annual Return : 6.7%, Best Year : 29.8% Worst Year : (10.1%)

Portfolio : 100% Bonds, Average Annual Return : 5.5%, Best Year : 32.6% Worst Year : (8.1%)

QUESTION 8

“I will need a monthly income from my investments within the next 2 years.” This is:

Not important

Not that important

Somewhat important

Important

Of utmost importance

QUESTION 9

Growth in an investment is:

Of utmost importance

Important

Somewhat important

Not that important

Not important

QUESTION 10

Safety of Principal is how important to you? Which statement best describes you?

“I’m a long term investor. I’ll accept an elevated risk if the potential return is the highest available.”

“I’ll accept above average risk in order to obtain a potentially higher return over time.”

“A moderate risk with my money is acceptable, if the potential return is worth the additional risk.”

“I’ll accept a potentially lower return in exchange for a lower risk.”

“I want to be certain my money is safe, and I would prefer not to lose any of it.”

TOTAL SCORE

Questions about your score?

Match your total score with one of the investment objectives listed below. If your score is near the top or bottom of an Adjusted Total Range, you may want to examine the next or previous objective to determine which represents your needs more accurately.

Score Portfolio Model Equities Fixed Income Real Estate Alternatives Cash, & Equivalents
45-50 Highly Aggressive (#1) 55-65% 7-17% 7-17% 7-17% 2-6%
38-44 Aggressive (#2) 50-60% 13-23% 7-15% 7-15% 2-6%
31-37 Moderately Aggressive (#3) 45-55% 20-30% 6-14% 6-14% 3-7%
24-30 Moderate (#4) 37-47% 27-39% 6-12% 6-12% 3-7%
17-23 Conservative (#5) 32-40% 35-47% 5-9% 5-9% 5-13%
10-16 Ultra Conservative (#6) 25-31% 39-59% 4-8% 4-8% 6-17%

Score 45-50
Portfolio Model Highly Aggressive (#1)
Equities 55-65%
Fixed Income 7-17%
Real Estate 7-17%
Alternatives 7-17%
Cash, & Equivalents 2-6%
Score 38-44
Portfolio Model Aggressive (#2)
Equities 50-60%
Fixed Income 13-23%
Real Estate 7-15%
Alternatives 7-15%
Cash, & Equivalents 3-7%
Score 31-37
Portfolio Model Moderately Aggressive (#3)
Equities 45-55%
Fixed Income 20-30%
Real Estate 6-14%
Alternatives 6-14%
Cash, & Equivalents 3-7%
Score 24-30
Portfolio Model Moderate (#4)
Equities 37-47%
Fixed Income 27-39%
Real Estate 6-12%
Alternatives 6-12%
Cash, & Equivalents 4-10%
Score 17-23
Portfolio Model Conservative (#5)
Equities 32-40%
Fixed Income 35-47%
Real Estate 5-9%
Alternatives 5-9%
Cash, & Equivalents 5-13%
Score 10-16
Portfolio Model Ultra Conservative (#6)
Equities 25-31%
Fixed Income 39-59%
Real Estate 4-8%
Alternatives 4-8%
Cash, & Equivalents 6-17%

Investment Model Descriptions

#1 – Highly Aggressive

Model Objective
Provide potential long-term growth with emphasis on attempting to maximize total return. May be appropriate for long-term investors who can tolerate high levels of market volatility or have more than 20 years to retirement.

Model Strategy
Invests primarily in domestic and international aggressive equities with a small allocation to fixed income/interest bearing instruments. Generally can be compared to a 90/10 equity to fixed income mix.

#2 – Aggressive

Model Objective
Provide potential long-term growth with emphasis on attempting to maximize total return. May be appropriate for long-term investors who can tolerate market volatility or plan on retiring in the next 10-20 years.

Model Strategy
Invests primarily in domestic and international equities with a smaller allocation to fixed income/interest bearing instruments. Generally can be compared to a 80/20 equity to fixed income mix.

#3 – Moderately Aggressive

Model Objective
Provide potential long-term growth with emphasis on total return with reduced volatility. May be appropriate for long-term investors who can tolerate market volatility, yet seek a balanced mix of stocks and bonds or plan on retiring in the next 10-15 years.

Model Strategy
Invests primarily in U. S. and international equities with a diversified mix of fixed income securities, including short and long term corporates and international bonds. Generally can be compared to a 70/30 equity to fixed income mix.

#4 – Moderate

Model Objective
Provide potential capital preservation with moderate income and growth potential over time with diminished risk. May be appropriate for investors seeking income stability and preservation of capital, are retired or planning to retire within 5-10 years.

Model Strategy
Invests in a diversified mix of fixed income securities, including short and long term corporates, international bonds, and some exposure to U. S. and international equities. Generally can be compared to a 60/40 equity to fixed income mix.

#5 – Conservative

Model Objective
Primarily provides potential capital preservation with moderate income and some growth potential over time with minimal risk. May be appropriate for investors seeking income stability and preservation of capital, are retired or are within 5 years of retirement.

Model Strategy
Invests primarily in interest bearing mutual funds with some exposure to domestic and international equity markets. Generally can be compared to a 50/50 equity to fixed income mix.

 

* Stock market returns were determined from the S&P 90 index from 1926 through March 3, 1957, the S&P 500 index from March 4, 1957 through 1974, the Wilshire 5000 index from 1975 through April 22, 2005, the MSCI US Broad Market Index from April 23, 2005 through June 2, 2013 and the CRSP US Total Market index thereafter. For U.S. bond market returns, we use the Standard & Poor’s High Grade Corporate Index from 1926 through 1968, the Citigroup High Grade Index from 1969 through 1972, the Lehman Brothers U.S. Long Credit AA Index from 1973 through 1975, the Barclays U.S. Aggregate Bond Index from 1976 through 2009, and the Spliced Barclays U.S. Aggregate Float Adjusted Bond Index thereafter. Data provided by vanguard.com.

 

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