Are you a risk taker or do you tend to be more conservative? While these personality characteristics might make interesting dinner conversation, they are vital when it comes to creating your investment portfolio. Unfortunately, many investors don’t take the time or are uncertain on how to determine how much risk they are willing to assume in exchange for the potential returns on their investments.

To help you get a better idea of how much risk you can tolerate when investing, take this quiz. Then share the results with your financial consultant, who can help you design a portfolio that matches your risk profile in addition to your other investment objectives.

Which statement best describes your attitude toward portfolio ups and downs?

1. I am uncomfortable with significant upswings and downswings in my portfolio and prefer its value to remain relatively stable.

2. I am comfortable with some variances in my portfolio value, although I would not describe myself as a significant risk-taker.

3. I can withstand some up and down movement in my portfolio to achieve long-term goals.

4. I understand that I must take some risk to benefit from the long-term rewards and am prepared to be patient, even in market downturns.

5. I think of myself as a risk-taker and do not mind volatile investments.



Which of the following best describes your overall investment personality?

1. Very conservative – I am willing to forego potential large returns for stability.

2. Conservative – I would like to minimize declines in my portfolio.

3. Moderate – I can withstand some fluctuation in my portfolio over time.

4. Aggressive – I want my portfolio to have the opportunity to significantly outpace inflation and am willing to accept wide swings in my portfolio value.

5. Speculative – I am willing to take chances on potential opportunities, which may yield large returns or large declines.



Which statement best describes your attitude toward investing in bonds?



1. I have not invested in bonds and believe I would be uncomfortable with a large part of my portfolio invested in bonds.

2. I have not invested in bonds, but I think some portion of my portfolio might benefit from some exposure to bonds.

3. I have invested in bonds, although I sometimes worry and feel uncomfortable with my bond investments.

4. I have invested in bonds and feel quite comfortable with the risks and rewards of my bond investments.



Which statement best describes your attitude toward investing in stocks?



1. I have not invested in stocks and I believe I would be uncomfortable with a large part of my portfolio invested in stocks.

2. I have not invested in stocks, but I think some of my portfolio might benefit from some exposure to stocks.

3. I have invested in stocks, although I sometimes worry and feel uncomfortable with my stock investments.

4. I have invested in stocks and feel quite comfortable with the risks and rewards of my stock investments.



To calculate your risk tolerance, add the numbers next to the responses you chose. The lower the score, the more conservative you may be; the higher the score, the more aggressive you may be.

If you find that you’re more conservative than you thought, you may want to choose investments with less volatility. Then, as you gain comfort with market action and your portfolio, you may feel the urge to venture into more aggressive investments.

Your financial consultant can help you further understand your investment personality and then help you choose investments that match your risk tolerance, investment objectives and time horizon.



This article was provided by A.G. Edwards, a division of Wachovia Securities, LLC. Member SIPC.

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