Risk Tolerance Questionnaire for dividend investors

Investor Risk Tolerance Questionnaire for Dividend Investors

Instructions

Answer the following questions to determine your risk score. Choose the option that best represents your feelings or situation. Each answer has a score assigned. Add up your scores to find your place on the risk tolerance scale.

Disclaimer: For information purposes only. This is just a quick personal assessment to help you better understand where your risk tolerance may be as an investor.

Questions and Scoring

  1. Investment Time Horizon:
    • a) Less than 2 years (Score: 10)
    • b) 2-5 years (Score: 20)
    • c) 5-10 years (Score: 50)
    • d) More than 10 years (Score: 70)
  2. Investment Experience:
    • a) Beginner (Score: 15)
    • b) Some experience (Score: 40)
    • c) Experienced (Score: 60)
    • d) Very experienced (Score: 80)
  3. Reaction to Market Downturns:
    • a) Sell immediately (Score: 10)
    • b) Anxious but hold (Score: 30)
    • c) Concerned but watchful (Score: 60)
    • d) See it as an opportunity to buy more (Score: 90)
  4. Income Requirements:
    • a) Rely heavily on investments for income (Score: 20)
    • b) Supplemental income needed from investments (Score: 40)
    • c) Minimal need for income from investments (Score: 60)
    • d) No current income requirement from investments (Score: 80)
  5. Investment Goals:
    • a) Preserve capital, avoid loss (Score: 10)
    • b) Modest growth, some risk (Score: 40)
    • c) Balanced growth, willing to take moderate risks (Score: 70)
    • d) Aggressive growth, high risk (Score: 90)
  6. Response to Hypothetical Portfolio Loss of 20% in a Year:
    • a) Sell everything (Score: 10)
    • b) Concerned, but would hold (Score: 30)
    • c) Would be willing to wait for a potential recovery (Score: 60)
    • d) Would invest more (Score: 90)

Scoring

  • Total your scores from each question.
  • The maximum score is 540 (indicating highest risk tolerance).
  • The minimum score is 60 (indicating lowest risk tolerance).
  • Adjust the scale: Your Risk Score = (Your Total Score / 540) * 100.

Risk Tolerance Scale

  • 10-25: Very Low Risk (Conservative)
  • 26-50: Low Risk (Cautious)
  • 51-75: Moderate Risk (Balanced)
  • 76-100: High Risk (Aggressive)

Interpreting Your Score

  • 10-25 (Very Low Risk): You prefer stability and are risk-averse. Investments like high-quality bonds or stable dividend-paying stocks might be suitable.
  • 26-50 (Low Risk): You are willing to accept some risks for potential growth. A mix of bonds and dividend growth stocks could be ideal.
  • 51-75 (Moderate Risk): You are comfortable with a balanced approach. A diversified portfolio of dividend stocks, with some growth-oriented investments, might fit.
  • 76-100 (High Risk): You are open to taking significant risks for higher returns. Consider a portfolio focused on high-growth dividend stocks and diversified across sectors.

*Use this as part of Our Annual Portfolio Review Process