New! Money Videos

CNBC on AOL

INVESTING

BUSINESS NEWS

Your Investment Profile

Filed Under: Investing
To get an idea of your investment profile, start by calculating your investment horizon. This is the number of years that you can invest. Your investment horizon depends on your financial goal. Your goal may be to save for college, retirement, or a down payment on a home. Each goal has its own investment horizon.

For example, saving for retirement at age 60 when you're 25 gives you an investment horizon of 35 years. The longer the investment horizon, the longer you can save and benefit from compounding.

Next, estimate your risk tolerance.

Your risk tolerance is your willingness to accept some volatility in the rate of return of your investments in exchange for a chance to earn a higher return. If you expect a higher rate of return, you should be willing to accept a higher degree of risk. This is called the risk-return trade-off.

To get an idea of your risk tolerance, take a few minutes to complete the following risk tolerance quiz:


Question
1 Point
2 Points
3 Points
4 Points
I plan on using the money I am investing: Within 6 months. Within the next 3 years. Between 3 and 6 years. No sooner than 7 years from now.
My investments make up this share of assets (excluding home): More than 75%. 50% or more but less than 75%. 25% or more but less than 50%. Less than 25%.
I expect my future income to: Decrease. Remain the same or grow slowly. Grow faster than the rate of inflation. Grow quickly.
I have emergency savings: No. -- Yes, but less than I'd like to have. Yes.
I would risk this share in exchange for the same probability of doubling mymoney: Zero. 50%. 25%. 10%.
I have invested in stocks and stock mutual funds: -- Yes, but I was uneasy about it. No, but I look forward to it. Yes, and I was comfortable with it.
My most important investment goal is to: Preserve my original investment. Receive some growth and provide income. Grow faster than inflation but still provide some income. Grow as fast as possible. Income is not important today.


Source: Securities Industry Association.

Add the number of points for all seven questions. Add one point if you choose the first answer, two if you choose the second answer, and so on. If you score between 25 and 28 points, consider yourself an aggressive investor.

If you score between 20 and 24 points, your risk tolerance is above average. If you score between 15 and 19 points, consider yourself a moderate investor. This means you are willing to accept some risk in exchange for a potential higher rate of return.

If you score fewer than 15 points, consider yourself a conservative investor. If you have fewer than 10 points, you may consider yourself a very conservative investor.



This is one example of a short quiz used by financial institutions to help you estimate your risk tolerance. For specific investment advice, you should consult a financial adviser.

Bookmark:

Recent Comments

Post Your Own  
1 - 5 of 5
5 comments

Denamull355 03:30:21 PM May 25 2008

Report This!

TNspygirl626 custom desighns for men,wemon,and children.prices are unbeatable.
if you are tired of paying mad money for originals come hit me up.ALSO SELL ASSESORIES,UNDERWEAR,SHOES,AND SO MUCH MORE.P.S.when e-mailing please describe the item,and event item is needed for.

Cargd969 07:51:07 AM Apr 29 2008

Report This!

www.carguide1.com a great place to find used cars

ANDY42 01:46:33 PM Apr 03 2008

Report This!

sorry.

Hokie 5 1973 09:47:51 PM Mar 28 2008

Report This!

well well well......so I'm an aggessive investor and nameplate on desk say:
Name
BOSS
_______
SSOB

My name and am boss ...croos the line I become ssob (boss spelled backward), a Sorry Son of a Biscuit Eater. My momma was no female dog, but she amde a mean biscuit and I ate as many as I could...hahaha.

Jerdking 08:06:36 PM Mar 24 2008

Report This!

IMPEACH TERRORISTS HERBERT HOOVER BUSH, AND HITLER CHENEY, WHAT WEAPONS OF MASS DESTRUCTION ? DUMP DISASTER REPUBLICONS.

1 - 5 of 5
5 comments

Add your own Comments

Clear
Add

Investing Basics

    Stock Quotes

    Stock Quotes

    There's more to investing than just the latest price...
    • Free real time stock quotes
    • The latest investing news
    • Over 30 detailed financial reports
    Stock Quotes

        My Portfolios

        My Portfolios

        My Portfolios is the web's most popular investing tracker. You'll enjoy...
        • Automatic totals for multiple investment portfolios
        • Track cash holdings & foreign issues
        • Customizable views My Portfolios

            Stock Screener

            Aol Stock Screener

            Tired of hearing about the same old stocks? Use our free stock screener to find the best stocks to suit your investment strategy.
            Stock Screener

                Headlines From AOL Money & Finance Partners

                Financial Times
                More Financial Times
                BusinessWeek
                More BusinessWeek.com
                SmartMoney.com
                More SmartMoney
                Portfolio.com
                More Portfolio.com
                Kiplinger
                More From Kiplinger.com