Determine Your Risk Tolerance

Would you be nervous if most of your savings was invested in stocks? How much of the market's ups and downs can you stomach? Knowing what type of investor you are will help you pick an investment mix with which you're comfortable. However, just because you are a "conservative" investor doesn't mean that all your investments should be conservative; likewise, if you are an "aggressive" investor, not all your investments must be aggressive. Remember that you also need to consider your goals and your time frame in creating an investment strategy.

Risk Assessment Tool

Read each pair of statements below. Which one sounds more like you—the one on the left or the one on the right? Or, are you somewhere in between? Select the number for each pair that describes where you fall between the two statements. Click "Add 'em up!" at the bottom to reveal the results.

My primary goal is to protect my retirement savings. I'm most concerned about losing what I have; I'm not willing to accept much risk.	1	2	3	4	5	My primary goal is to earn enough on my retirement savings to stay ahead of inflation. I'm willing to take on investment risk to do so.
I would still worry about short-term investment losses, even if I didn't need my retirement savings for 20 years.	1	2	3	4	5	I wouldn't worry about short-term investment losses, as long as I didn't need my savings in the near future.
If the stock market dropped significantly tomorrow, I'd probably accept my losses and pull my savings out of stocks to keep from losing more money.	1	2	3	4	5	If the stock market dropped significantly tomorrow, I'd probably take advantage of the low share prices by putting more money into the market before the prices went back up.
I would definitely be upset if my quarterly statement showed a loss.	1	2	3	4	5	A loss on a quarterly statement wouldn't necessarily bother me.
If I have a choice between $1,000 cash and a 1-in-10 chance of earning $10,000, I'd definitely take the cash.	1	2	3	4	5	If I have a choice between $1,000 cash and a 1-in-10 chance of earning $10,000, I'd definitely take the chance.
I wouldn't invest in a start-up company, even one with a promising idea; the risk of losing the entire investment is just too great.	1	2	3	4	5	I'd invest in a start-up company if it had a promising idea; I have to take some chances to earn a really good return.
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