All of the volatility in the stock market recently has probably tested your tolerance for risk. And some people may feel that they are more tolerant to risk than they really are, and there is nothing like a sharp dip in the market to bring that to light. So I thought it would be a good time to evaluate just how tolerant we all are to risk, because the better you know yourself and your investment style, the more prepared you’ll be to handle the ups and the downs. People who are aggressive investors might have seen last week as a great buying opportunity while other more conservative people were hiding under their comforter praying for it to be over. I recently took 3 risk quizzes online to identify my tolerance for risk that I thought I would share today so you can see what is your risk tolerance.
Quiz 1 – Bank Rate: This was the “quick and dirty” quiz of the bunch. You only have to answer 6 straightforward questions. At the end it tells you your score (but not the significance of it) and which of 3 risk categories you fall into: Conservative, Moderate or High Risk Tolerance. I had a moderate risk tolerance with a score between 10-14.
Quiz 2 – Vanguard: I thought the questions were a little more insightful than the Bank Rate quiz. At the end, instead of telling you about your risk tolerance score, Vanguard suggests how your portfolio should be balanced. This also takes into account your age range and when you plan to retire and/or start dipping into your retirement account. I liked this quiz for someone that has basic investments such as index funds and a retirement account and is looking to make sure they’re asset mix is on track. I was told I should have a portfolio comprised of 80% stocks and 20% bonds.
Quiz 3 – Yahoo Finance – The quiz questions were similar to Vanguard’s and allowed for a little self-inflection when thinking about risk, which I liked. In the end, it told me that I was a moderate risk taker, but it also let me see my score on each question under my risk profile summary, helping me to identify which areas I’m more conservative in than others. This was my favorite of the three.
How did you do? What is your risk tolerance?
Photo Credit: Ged Carrol