One of the basic principals of investing is that the higher return you seek, the more risk you face. Your investments need to strike a balance between risk and return that you can be comfortable with. Therefore, before you make a decision on any investment, you need to consider how you feel about the prospect of potential risk. The following questionnaire will help you determine your risk comfort level.

1. Which factor would you consider to be most important before choosing an investment?

How quickly I will be able to increase my wealth.

The amount of monthly income the investment will generate.

The safety of my investment principal.

2. Which of the following statements best describes your approach to investing?

I am willing to forego capital gains for the comfort of knowing that I have little risk to principal.

My primary interest is in increasing the value of my investment portfolio, with minimal potential for loss.

I want to pursue opportunities for growth in my investments—at moderate levels of risk and principal fluctuation.

I want to pursue maximum long term returns and am willing to accept the risk of principal fluctuation associated with this strategy.

3. Many investments fluctuate over the short term. If a $100,000 investment that you made for ten years lost value during the first year, at what point would you sell and move to a more stable investment, rather than wait for a turnaround?

$95,000

$90,000 to $94,000

$80,000 to $89,000

less than $80,000

4. In general, my feelings about the U.S. and world economies are:

Pessimistic

Unsure

Optimistic

Your score is: