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FMC
Risk Tolerance Questionnaire
Copyright 1998, Financial Management
Corporation and Frank Sisco
(Tel 914-381-3737, Fax 914-381-3737)
Your name__________________________________________________
Your work tel. #_____________ Your home
tel#_________ Date ________
(Please answer by circling an answer
in the box at the right of the question. Feel free to write additional
information about your concerns. Please call Frank Sisco to discuss
any of these matters in more detail.)
FMC Questions |
Y-Yes
N - No
?-Not sure
N/A-Not applicable
H-High
M-Medium
L - Low |
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1. |
Do you consider yourself to be a "risk-taker"
in the general sense of the term? |
Y or N |
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2. |
Has your past experience with taking risks paid
off for you financially? Describe one example that has ______________________________________and
one that has not.__________________________________________________ |
Y or N |
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3. |
Do you believe that taking responsible risks
with your financial resources is important to your future happiness
and that of your family? |
Y or N |
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4. |
How much more money would you need to have right
now for you to consider taking greater risk with investments? |
$_________ |
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5. |
What do you consider to be "long-term"
in the context of personal financial planning? |
1, 5, 10, or 20 years |
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6. |
Indicate the level of importance you give
to the positive impact that each of the following
events would have on your financial health.
- Making 20% more money in my career or business.________H,
M, L >>>
- Making 20% more money on my investment return.________H,
M, L >>>
- Reducing my income taxes by 20% ____________________H,
M, L >>>
- Downsizing my life by selling my house and
buying a less expensive one____________________________________________H,
M, L >>>
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7. |
Indicate the level of importance you give
to the negative impact that each of the following
events would have on your financial health.
- Becoming disabled so that I can no longer
work___________H, M, L >>>
- Spending all my assets by age 65______________________H,
M, L >>>
- Seeing my investments decline by 20% in one
year with reasonable chance to recover in 5 years._________________________H,
M, L >>>
- Seeing my investments decline by 5% each
year over a 10 year period__________________________________________H,
M, L >>>
- Dying and having my beneficiaries pay 50%
in estate taxes.__H, M, L >>>
- Having a catastrophic illness.________________________
H, M, L >>>
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8. |
What type of investments do you think usually
go up in value when market interest rates go up? |
Stocks, bonds, gold, real estate |
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9. |
What is your familiarity with different types
of mutual funds (equities, bonds, balanced,value, growth, index,
cash)? |
H, M, L |
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10. |
If you had the opportunity to have 25% more assets
at age 90, whom would you choose to be the beneficiaries of those
extra assets? |
Spouse, children, other family, charity |
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11. |
How do you feel about the extra time it takes
to become knowledgeable about new ideas for investments, taxes,
insurance, estate planning, budgeting, savings, etc.? |
- Enjoy
- No feeling
- Prefer not to
- Uncomfortable
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12. |
Rank the negative impact that the following
has had upon your financial health:
- Lost money invested in a business. Terrible
(T), Minor (M), None (N)___
- Lost money to a friend. (T, M, N)_______________________________
- Lost income by being in the wrong profession.
(T, M, N) _____________
- Spent too much money on the purchase of home
and furnishings (T, M, N) _____________________________________________________
- Spent too much money on entertainment and
personal purchases (T, M, N)_____________________________________________________
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13. |
The next question relates to your understanding
of the usual techniques to reduce certain investment risks:
These are the major investment risks:
- #1. Inflation risk (Purchasing power declines).
- #2. Currency risk (For foreign currencies).
- #3. Volatility risk (Fluctuations in value).
- #4. Interest rate risk (Marketplace rates
change).
- #5. Marketability risk (Limited ability to
sell out).
- #6. Business risk (Company's value deteriorates).
- #7. Market risk (A market like the stock
market declines).
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- Listed below are the techniques that can
be used to reduce the above risks:
- Write to the right of each technique the
number that corresponds to the above risk that the technique
helps to reduce:
- a. Spread investments among countries or
hedge. _____
- b. "Ladder" the portfolio with
different maturities._____
- c. Choose investments in tune with time horizon.
_____
- d. Diversify within an asset category.______
- e. Keep investments for long term.______
- f. Invest in stocks or in hard assets._______
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14. |
If you knew that the Dow Jones Industrial
Average (of 30 stocks) went down from 891 on 11/18/64 to 776
on 8/12/82 (13% decline during the 18 years), do you agree (A)
or disagree (D) with each of the following statements?
- a. That is a very long period of time for
stocks to decline. I'm worried that it could happen again. A
or D
- b. In the very long-term, there is no need
for me to worry. Evidence is that the DJIA was over 8,000 in
1998. A or D
- c. Stocks go up and down. When they are down,
I will buy more. A or D
- d. Stocks are too volatile for me. A or D
- e. The time is near for a bear market like
the 1964 to 1982 bear market to repeat itself. A or D
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15. |
If most people you knew thought a certain investment
was a good deal, would you buy it also without spending much
time on research? |
Yes, Probably not, Maybe, No |
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16. |
Would you risk giving the below % of your
assets away to family members in order to avoid estate taxes,
or would you rather keep the assets under your control until
you die?
- 20% ___________ Yes or No
- 40% ___________ Yes or No
- 80% ___________ Yes or No
- 100% __________ Yes or No
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17. |
Are you and your spouse similar in your views
on risk? |
Yes, Somewhat, Not at all |
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18. |
How often do you have upsets about money issues? |
Often, Sometimes, Seldom, Never |
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19. |
Is your current level of income sufficient to
cover all your expenses? |
Yes with a lot extra, Yes, Barely, No |
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20. |
Indicate the order of importance of the following
reasons why you want more money. Please number them from #1 (most
important) to #12 (least important).
- #___ Provide for future years in retirement
for me and my spouse.
- #___ Provide for children's education and
future expenses.
- #___ Be able to spend more money to enjoy
life now (e.g. vacations, furnishings, etc.)
- #___ Buy new home or more expensive home.
- #___ Afford to work less and make less income
for me or spouse.
- #___ Peace of mind.
- #___ Afford to leave current job and start
my own business.
- #___ Begin a new career.
- #___ Have a bigger family.
- #___ Provide a nest egg to protect against
high medical expenses.
- #___ Buy more insurance needed now.
- #___ Have a cushion of 6 months living expenses
in case I became disabled.
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21. |
How do you rate the risk of the following
activities? Circle H (high risk), S (Some risk), or L (Little
risk)
- a. Being a policemen. H, S, L
- b. Being an emergency room doctor. H, S,
L
- c. Being a commodities broker. H, S, L
- d. Letting someone else manage your money.
H, S, L
- e. Flying in a commercial airliner. H, S,
L
- f. Driving on a busy interstate highway.
H, S, L
- g. Water skiing. H, S, L
- h. Going into the restaurant business. H,
S, L
- i. Becoming a salesperson of high-ticket
items. H, S, L
- j. Investing in government bond funds. H,
S, L
- k. Investing in options or futures.
- l. Not reporting income on your tax return.
H, S, L
- m. Not carrying health insurance. H, S, L
- n. Not carrying adequate life insurance.
H, S, L
- o. Rollerblading for the first time. H, S,
L
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