SUITABILITY - Tests
Not all clients are the same.
Clients fall into risk profiles.
Each client's propensity for risk differs.
Moreover clients generally have different risk profiles for different activities.
Investment portfolios are measured by volatility, the higher the volatility the riskier the portfolio is to losses.
Below is a Risk Profile Test which will help you decide if you are an Aggressive, Balanced or Conservative investor.
- Test # 4
1. How much time can you spend monitoring Financial markets?
Very little. - 0 pts
10 Minutes Per Week. - 1 pt
30 Minutes Per Week. 2 pts
1 Hour Per Week. - 3 pts
2 Hours+ Per Week. - 5 pts
2. How important is it for your investment to pay you a monthly income?
Essential. - 0 pts
Very Important. - 2 pts
Important. - 4 pts
Somewhat Important. - 6 pts
Not Important. - 8 pts
3. How much of your income do you save every month?
Under 5%. - 2 pts
5% to 10%. 4 pts
10% to 25%. 6 pts
Over 25%. 8 pts
4. How much Emergency savings do you keep?
under $3,000 or less than 1 month of expenses. - 1 pt
$3,001 - $10,000 or 1 month of expenses. - 3 pts
$10,001 - $20,000 or 2-4 months of expenses. - 5 pts
Over $20,000 or more than 6 months of expenses. - 8 pts
5. The best Bear market investment strategy is:
Cash. - 5 pts
Shorting the market. - 12 pts
Wait for the Bull market to recover losses. - 8 pts
6. Which of the following statements do you agree with most?
I won't invest if there is a risk of any loss. - 2 pts
I can accept some risk of losing money in the hope of getting a higher return than from a savings account, CD or money market account. - 4 pts
I can accept a moderate risk with my money in hopes of outpacing inflation. - 6 pts
I can accept a substantial chance of loss if that gives me an opportunity of high returns in the long run. - 8 pts
7. Your age is?
under 25. - 4 pts
26 to 39. - 3 pts
40 to 65. - 2 pts
Over 65. - 1 pt
8. How important is it that your investments grow in value?
Essential. - 8 pts
Very Important. - 6 pts
Important. - 4 pts
Somewhat Important. - 2 pts
Not Important. 0 pts
9. If you invest in an investment, when would you expect to withdraw the funds?
Less than 6 Months. - 0 pts
1 to 3 Years. - 2 pts
3 to 5 Years. - 4 pts
5 to 10 Years. - 6 pts
Over 10 Years. - 8 pts
0 - 30 points you have a Conservative risk profile
31 - 57 points you have a Balanced risk profile
over 58 points you have an Aggressive risk profile.