Risk—and how well you handle it—should help determine your investment decisions. For a personalized risk tolerance score, visit the Rutgers Cooperative Extension “Investment Risk Tolerance Quiz” Web site at: http://njaes.rutgers.edu/money/riskquiz/.
Below are three categories of investors and some characteristics that describe them:
• I want my money safe at all times, and I don’t want to lose any of it.
• Any decline in the value of an investment that I own concerns me.
• I’m uncomfortable with price volatility (i.e., changes in investment share prices).
• I want to minimize losses and fluctuation in the value of my investments.
• I like to invest in something safe that offers a fixed rate of return.
• I’m willing to give up higher rates of return in order to keep most of my principal intact. •
I prefer investments that provide regular income without much exposure to principal loss.
• I want my investment return to beat inflation by at least 2 percent.
• I select investments that have a moderate amount of volatility, yet offer the opportunity for rates of return higher than certificates of deposit or government bonds.
• Although a decline in the value of my investments concerns me, I can accept temporary market volatility in return for growth opportunities.
• I would like to increase the value of my investments moderately with limited exposure to risk, and I am willing to ride out market downturns.
• I want a balanced investment mix and am willing to put up with some short-term fluctuation in value.
• I like substantial appreciation opportunities, even though it puts my capital at high risk.
• Temporary market fluctuations do not concern me because maximum appreciation is my primary long-term goal.
• I expect a return greater than the S&P 500 from my investments.
• I am financially able to accept some limited liquidity in my investment portfolio.
• I take calculated risks in order to ensure a potential for the highest return over time.
• I have the conviction necessary to hold on to my investment during those years when it could drop in value by 25 percent or more
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