Our Comprehensive Risk Tolerance Assessment
Factors like age, financial status, and investment experience significantly influence risk tolerance. Younger investors might have a higher risk tolerance because their investment horizon is longer, whereas older investors nearing retirement might prefer safer, low-risk investments.
So, what is your appetite for risk? Perform our self-assessment below to find out.
Take Our Risk Tolerance Assessment
Answer these five questions to help you determine how much risk you can comfortably manage.
1. How do you feel about losing money on an investment?
I can't stand losing any money I can handle small losses I'm okay with losing some for higher gains2. How long is your typical investment horizon?
Less than 3 years 3 to 7 years More than 7 years3. If your investment portfolio lost 20% in one year, what would you do?
Sell everything to stop losing more Hold on and wait for things to get better Buy more while prices are low4. How would you describe your current financial situation?
Lots of debt, no savings Some debt, some savings Little to no debt, good savings5. What are your primary investment goals?
I want to avoid losses and keep my capital safe I like moderate, consistent gains I aim for the highest returns and maximum growthUnderstand Your Risk Tolerance Assessment Results
Add up the points from your answers to find your risk tolerance category.
A: 1 point
B: 2 points
C: 3 points
5-7 Points: Conservative Risk Tolerance
You prefer low-risk investments like bonds or savings accounts, aiming to keep your money safe and seeking modest, steady returns. You value stability and are more concerned with safeguarding your assets than achieving high returns.
A conservative approach to risk is particularly suitable for individuals nearing retirement or those with short-term financial goals who cannot afford to take significant risks.
8-11 Points: Moderate Risk Tolerance
You are willing to accept some risk for the chance of higher returns. A balanced mix of stocks and bonds suits you, offering growth, stability, and protection against market volatility.
Most investors fall within this category, as it allows for reasonable growth potential without exposing them to extreme risks. Many mid-career individuals with a long-term investment horizon and moderate financial stability find this strategy aligns well with their goals and risk comfort levels.
12-15 Points: Aggressive Risk Tolerance
You are comfortable with taking on quite a bit of risk in pursuit of significant returns, often choosing to invest heavily in high-growth stocks, emerging markets, and other high-reward opportunities.
Aggressive investors are often younger individuals with a long investment horizon, allowing them to weather short-term market volatility in exchange for the potential of high long-term gains. This approach requires a strong stomach for market fluctuations and a keen focus on long-term growth rather than immediate stability. It's ideal for those who seek maximum capital appreciation and are prepared to handle the associated risks.
Explore Your Investing Options with MarketBeat
Once you have determined your risk tolerance, selecting the right investments becomes much easier. MarketBeat provides comprehensive tools and resources to help you compare a wide variety of investment options. Whether you are conservative, moderate, or aggressive in your risk approach, MarketBeat can assist you in finding investments that align with your goals and comfort levels, ensuring you are on the right path to achieving your financial objectives.
Source MarketBeat