RISK TOLERANCE 5
Running head: RISK TOLERANCE 1
American Military Public University
BUSN235: Personal Finance
Dr. Donna Galla
July 17th, 2022
• What did this survey tell you about your Risk Tolerance level?
After conducting the survey, I have realized I take the average amount of risks. The score I received from the survey was a 27. The score level means that I have an average or moderate tolerance for risk. I agree with the score. I am very cautious when it comes to taking risks. Since investments deal with finances and I am unsure about how investments work I would be more cautious on how I invest my money.
• According to this instrument, what kinds of investments should you consider.
After taking the survey, the types of investments that I would consider would be a mixture of bonds and stocks. By doing bonds and stocks it will create a balanced portfolio. The reason I would consider these types of investments I would be able to grow my money. Also, I would not lose as much money.
• Briefly discuss the various risk levels and what they mean.
Each level of risk tolerance has a meaning. High tolerance for risk is when a person is more willing to risk losing money for potential gain. Above-average tolerance for risk is similar to high tolerance for risk. Moderate tolerance for risk is a person who is acceptable to some risk. A moderate risk taker is slightly more cautious than a high-risk person. Below average or low tolerance for risk is only willing to accept little to no risks.
• Include a profile for yourself as an investor; make sure you analyze and discuss the various types of investors and where you fit in.
As an investor I am a moderate investor. It would be a mixture of stocks and bonds. I would utilize the 60/40 rule which would be 60% of stocks and 40% of bonds. An aggressive investor is someone who is willing to risk it all. The type of investments would be types that will maximize returns. The conservative is a less risk taker. This type of investor wants to build their stock portfolio and have steady returns.
• Discuss whether you think your investor profile may change over time as you age, or do you think it will remain the same?
Overtime, I do feel that my investor portfolio will change. Once I begin to make a return on my investments I would want to try to invest elsewhere. This will cause me to revise my portfolio. Also, a revision may be needed due to the change of investment goals. As I grow and I achieve investment goals I will need to create new ones to achieve.
• Finally, how would your profile assist you and your financial advisor or investment advisor in planning your portfolio?
My investment profile will allow my financial advisor to get an overview of my goals. It will help my advisor help with making out plan to accomplish my goals.
Despard, M. R., Friedline, T., & Martin-West, S. (2020). Why do households lack emergency savings? The role of financial capability. Journal of Family and Economic Issues, 41(3), 542–557. https://doi.org/10.1007/s10834-020-09679-8
RISK TOLERANCE 5