Investment Risk Assessment

Q1: In an effort to grow your wealth, can you afford to lose any money over the next two years?

Q2: When do you expect to start withdrawing money from your investments?

Q3: For how long do you expect to withdraw funds from your investments?

Q4: Which of these portfolios would you prefer to hold?

Q5: Which portfolio would you prefer to hold?

Q6: Investments can rise and fall in value over time. Imagine you made an investment and its value fell by 10% over the first year. How would you react?

Q7: For many investors, the possibility of losing money is a concern. How do you feel about investment losses?

Q8: What best describes your response to the following statement: “I am comfortable with investments that may frequently experience large losses in value if there is a potential for higher returns.” ?

Q10: Investing involves a trade-off between risk and returns. Historically, investments with higher returns have been associated with greater risk and chance for loss. Alternatively, cautious investments that have had a lower chance for loss, also have yielded lower returns. Based on this description of investment characteristics, which of the following statements best describes your attitude to risk?

Q11: Over a longer period, risky investments usually generate greater wealth than less risky investments do. Which of these portfolios do you prefer?

Capacity for loss is a consideration of your ability to sustain a loss in respect of a particular investment. It is important that you do not expose yourself to a greater potential investment loss than you can afford. For example, we would generally consider that someone who was entirely dependent on a modest-sized investment to provide all their income would have a lower capacity for loss than a multi-millionaire who is investing to fund a new speedboat.