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Risk Profile Questionnaire
Progressive Investors Network, LLC
1) TIME FRAME: Take a look at how many years you can let your money grow before you’ll need to tap into your nest egg. (This is important because a “fully invested” investor must be able to withstand down cycles.)
1-2 years (2 points)
3-5 years (4 points)
6-10 year (5 points)
More than 10 years (8 points)
2) YEARS UNTIL RETIREMENT: Where are you in relation to retirement? The farther you are from retirement, the more risk you may take
0 years (2 points)
1-5 years (4 points)
6-9 years (5 points)
More than 10 years (8 points)
3) FINANCIAL CUSHION: Take a look at your total financial position and the cushion you have set aside (outside your investment portfolio) for emergencies. This will help you decide how much risk you may prudently take in your investing.
Little outside savings set aside, hence preservation of principal is very important (2 points)
Reasonable savings set aside and are willing to take moderate risk for moderate market returns (4 points)
Ample savings set aside (house paid off, CD's, Insurance, etc.), hence you feel comfortable taking larger risks for maximum return potential (6 points)
4) CASH FLOW: what is your planned cash flow into and out of your investment portfolio over the next 3-5 years? Do you plan to contribute regularly to your investment account, or do you intend to take out more than you put in?
Withdrawal money on a continuing basis (0 points)
Withdrawal money occasionally (1 point)
Neither add nor withdrawal money (2 points)
Add money occasionally (3 points)
Add money on a continuing basis (4 points)
5) NEED FOR INCOME
Critical (2 points)
Needed to a large degree (4 points)
Needed to a minor degree (5 points)
Not important (8 points)
6) INVESTING ATTITUDE: Your current attitude toward investing over the next decade will help dictate what type of strategy you could adopt and how much risk your investments could entail.
I cannot afford any significant loss of capital regardless of potential return (1 point)
If I can get ample income from bonds, it is not worth suffering through the ups and downs of the market (2 points)
I believe in the power of compounding and potential for gain from equities and want to benefit from the potential (3 points)
Higher risk investments tend to earn higher returns than lower risk Investments and I want higher returns, so I am willing to take higher risks (4 points)
7) SPECIAL CIRCUMSTANCES: Are there any circumstances you can envision (college tuition, home purchase, retirements etc.) outside the usual contributions and withdrawals that might necessitate the immediate liquidation of a major portion of your portfolio?
Full portfolio could be liquidated (1 point)
Major liquidations (2 points)
Some small liquidations (3 points)
No liquidations planned (4 points)
8) PRIMARY OBJECTIVE: Think about your personal investment goals.If you would generally categorize your primary objective as:
Capital Preservation emphasis on maximizing principal stability; future growth of income and principal are of minor importance; short investment time horizon and low tolerance for big fluctuations in current income (1 point)
Current Income emphasis on providing a high level of current income; further growth of income and principal are secondary objective (2 points)
Balanced approximately equal emphasis on current income and potential for further appreciation and income growth 3 points
Long-term Growth emphasis on future appreciation, not current income, year to year principal stability is not important
9) INVESTMENT LOSSES: Give your personal feeling about investment losses, and how willing you are to tolerate losses emotionally, by rating your risk tolerance.
Low risk (0 points)
Below average risk (1 point)
Average risk (2 points)
Above average risk (3 points)
High risk (4 points)
10) LONG-RANGE PERSPECTIVE: What is your attitude toward the following statement? “My investment is for the long-term and volatility is not a problem.”
Totally disagree with this statement (1 point)
Willing to tolerate some variability of return by rarely any loss of capital (2 points)
Willing to accept an occasional year of negative return in the interest of building capital (3 points)
Agree with this statement (4 points)
11) RISK/RETURN OBJECTIVES: What is your overall reason for investing in the financial markets?
Preserve purchasing power (i.e., keep up with inflation) (1 point)
Meet or exceed the “risk free” return on 91 day treasury bills (2 points)
Accept some market risk but cushion losses if the market declines even at the cost of less than proportionate gains in market advances (3 points)
Maximize long-term returns while accepting the likelihood of short-term volatility in my account (4 points)
12) RISK TOLERANCE: Five hypothetical 7-year investment performance returns are presented below.Check the one that is most appealing to you.
Very little risk in order to obtain returns (Yr 1-6) 2.5%, 10.2%, 11.8%, 3.5%, -2.0%, 4.4%, 7.0% (Avg 6.0%) (0 points)
Some risk in order to receive better returns (Yrs 1-6) -4.8% 17.0% 14.8% 0.7% 4.3% 6.8% 13.4% (Avg. 7.5%) (1 point)
Average risk in order to exceed inflation after tax (Yrs 1-6) -12.0% 23.8% 17.7% -2.0% 5.0% 10.7% 19.8% (Avg. 9.0%) (2 points)
Expectation of receiving better than average returns while experiencing moderate volatility (Yrs 1-6) -19.3% 30.6% 20.7% -4.7% 5.7% 14.6% 26.1% (Avg. 10.6%) (3 points)
Opportunity to receive maximum returns while experiencing high short-term volatility (Yrs 1-6) -26.5% -7.4% 23.6% 37.3% 6.5% 18.5% 32.5% (Avg: 12.1%) (4 points)
RESULTS: (a) If you scored a "2" on questions 1, 3, or 5, your income and liquidity needs may outweigh other considerations. We do not recommend you select the moderate/aggressive or aggressive allocation. (b) If your need for annual income from the portfolio exceeds 6% of the invested principal, you situation requires a much more customized solution. We will assist you in structuring a portfolio appropriate for your income needs. (Allocation | Score)
Conservative | 13-21
Moderate/Conservative | 22 - 30
Moderate | 31 39
Moderate/Aggressive | 40 - 48
Aggressive | 49 - 58
What else should we know about your risk tolerance?
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