The Portfolio Planner provides a link to a set of questions that can be used to help determine an investor's return/volatility comfort or risk tolerance level. The table below shows the characteristics that are used to help determine if an investor return/volatility comfort is conservative, aggressive or somewhere in between.
|
Characteristic |
Volatility/Return Comfort |
||
|
Low (Conservative) |
Medium |
High (Aggressive) | |
|
Investment Approach |
Minimize risk |
Accept Some Risk |
Accept Significant Risk |
|
Expected Return |
3% to 6% |
6% to 9% |
9% to 11% |
|
Acceptable Return Fluctuation |
+0% to +7% |
-10% to +20% |
-20% to +40% |
|
Main Objective |
Safety of Investment |
Balance of Safety and Growth |
Long-term Growth |
|
Response to Fluctuation |
Would likely sell and look for a better alternative if the value of the investment declined by 20% over the past year, despite many years of good returns. |
Would watch the investment for a at least a year before making changes if the value of the investment declined by 20% over the past year, despite many years of good returns. |
Would stay invested if the value of the investment declined by 20% over the past year, despite many years of good returns. |