Preview of Risk Tolerance Questionnaire

In order for to recommend an asset allocation, we need to know how you feel about risk in your portfolio. The following 18 questions help us to recommend an investment strategy in line with your risk tolerance.

1. In how many years do you estimate that you will begin to need the money you are investing?
 Within the next three years.
 From three to seven years.
 From seven to 12 years.
 Longer than 12 Years.
2. Once you begin making withdrawals, over how many years do you expect to draw down assets from this portfolio?
 Five to ten years.
 Less than five years.
 Lump sum.
 More than 10 years.
3. If you will be adding to your portfolio, what percentage of your current portfolio’s value will you expect to add annually over the next five years?
 1% to 2%.
 3% to 5%.
 6% to 10%.
 10% or greater.
 I am not sure.
4. Do you generally find yourself more comfortable investing in things that have done well the last few years?
 Not sure/depends.
5. If a unique circumstance were to require an amount of capital equal to at least one-fourth the value of this portfolio, where would you obtain the money?
 All from this portfolio.
 The majority from this portfolio.
 From other savings and investments.
 I cannot envision a circumstance occurring that would require that much capital.
 Less than half from this portfolio, and the remainder from other savings and investments.
6. If you use withdrawals from your portfolio for living expenses, what lifestyle changes (if any) would you make if your portfolio declined substantially?
 No changes. I would continue to spend the same amount.
 Reduce spending slightly.
 Would keep spending the same but would cut withdrawals from this portfolio and use other assets to fund spending in the meantime.
 Would cut spending sharply.
 Not applicable, I am not making any withdrawals from this portfolio.
 I cannot allow my portfolio to decline substantially.
7. When you review your portfolio, do you focus more on the individual positions or the overall portfolio?
 I am only concerned with the overall portfolio performance.
 While overall portfolio performance is important, I tend to focus on the performance of individual positions in the portfolio.
8. You are given a choice between two portfolios. The total values of BOTH portfolios fluctuate by roughly the SAME amount, but the fluctuations in value of the individual positions are much wider. Which portfolio would you be most comfortable with?
 A portfolio with an annualized return of 10% where the returns of the individual holdings range from 0% to 15%.
 A portfolio with a slightly higher annualized return of 11% but where the returns of the individual holdings range from a 10% loss to a 20% gain.
9. Which is closest to the largest percentage amount you ever lost on a single investment?
 Never lost money.
10. Which of the following statements best describes what you did during the most recent investment losses you suffered?
 Bought more.
 Sold quickly to avoid further losses.
 Continued to hold the investment.
 Held too long then sold close to the bottom.
 Not applicable.
11. Which best describes how you felt about steep losses you experienced?
 High levels of anxiety and/or frustration.
 Desire to find another high-risk investment to make up the loss.
 Acceptance that losses are part of investing and that the risk I took was reasonable relative to the potential gain.
 Denial. I was upset but tried not to look at the value, and hoped that eventually it would come back.
 Initial frustration followed by acceptance.
 Not applicable.
12. Many investors experienced steep losses in the bear market that began in the fall of 2008. Did this experience impact your willingness to accept risk?
 I am more concerned with risk as a result and inclined to invest more conservatively.
 I believe bear markets create good longer-term opportunities and am willing to take on more risk at such times.
 My willingness to take on risk is no different today than it was prior to the bear market.
13. Consider two investments. An expert, whom you trust, tells you they are equally risky. If one of those investments is more difficult to understand, are you likely to view it as riskier?
14. Which of the following best describes your expectations for performance?
 My performance should at least equal the stock market.
 I am willing to accept a little lower return than the stock market in exchange for a little greater safety.
 I don't care what the stock market does as long as I can beat inflation at low risk.
 My level of return doesn't matter as long as I don't lose money over any more than a few months.
 I want to beat the stock market and am willing to assume above-average risk in pursuit of capital growth.
15. Investments generate returns in different ways. Which of the following more closely describes your view?
 Dividend yields and interest are better suited for meeting living expenses.
 Overall return is my primary concern; it doesn't matter where it comes from or how it is employed to meet any cash flow needs I may have.
16. How would you most likely react to losses in your portfolio?
 As long as the losses are in the range of what I knew was possible, I feel it is important to have the stomach to stay the course and that my long-term success will probably be compromised if I don't.
 I am not sure how I would react.
 During difficult periods I have a harder time sticking to my guns and feel safer taking a temporary defensive position until things improve.
17. Describe the kind of risk with which you are comfortable.
 I could handle being down over a three-year period, but not longer.
 I could handle a one-year loss, but do not want to pursue a strategy that could result in longer periods of loss.
 I could handle losses over one or two quarters, but would not be comfortable subjecting myself to longer down periods.
 I don't want to lose any money ever. I could handle only a very small loss over a few months at most.
 I could accept being down over longer than three years if my long-term return potential was above average.
18. In terms of magnitude, indicate the level of the likely worst-case return you could accept in pursuit of above-average returns?
 5% loss over one year.
 10% loss over one year.
 15% loss over one year.
 20% loss over one year.
 Zero return over one year.