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STEP 1: ANSWER QUESTIONS 1-12 BELOW
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How does this investment fit into your financial picture?
IT IS IMPORTANT TO CONSIDER THIS INVESTMENT IN RELATIONSHIP TO YOUR TOTAL
PORTFOLIO. THE PERCENTAGE OF YOUR PORTFOLIO THAT THIS INVESTMENT REPRESENTS CAN MAKE A DIFFERENCE IN HOW CONSERVATIVE OR AGGRESSIVE YOU WANT TO BE.
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1. Approximately what portion of your total "investable assets" (the dollar amount of the investments you currently have) will this investment represent?
(Use the formula below to quickly calculate your investable assets. Do not include your principal residence or vacation house when arriving at this total.)
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Question 2:
YOUR EXPECTATION OF FUTURE EARNINGS WILL HELP DETERMINE HOW YOUR ASSETS SHOULD BE ALLOCATED. IF YOU'RE EXPECTING SIGNIFICANT EARNINGS / INCREASES IT MAY BE APPROPRIATE TO BE SOMEWHAT MORE AGGRESSIVE.
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2. Which ONE of the following describes your expected future earnings over the next five years? (assume inflation will average 4%)
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Questions 3 & 4:
IF A LARGE PORTION OF YOUR INCOME GOES TOWARD PAYING DEBT, YOU MAY NEED TO HAVE CASH AVAILABLE IN CASE OF UNFORESEEN CIRCUMSTANCES OR, YOU MAY HAVE RESPONSIBILITIES FOR ONGOING FAMILY OBLIGATIONS. EITHER CAN DICTATE A MORE CONSERVATIVE APPROACH.
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3.
Approximately what portion of your total take-home income goes toward paying off installment debt (car loans, credit cards, etc.) other than a (house) mortgage loan?
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4. How many dependents do you have?
( include children you continue to support, elderly parents, etc. )
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Do you have other savings?
Questions 5 & 6:
AN EMERGENCY FUND HELPS PROTECT YOU AGAINST UNEXPECTED EVENTS. WITH UNFORESEEN CIRCUMSTANCES SUCH AS LOSS OF INCOME, MANY PEOPLE NEED TO DRAW ON THEIR ?LONG-TERM? MONEY FOR SHORT-TERM NEEDS. UNLESS YOU HAVE SEPARATE SAVING FOR MAJOR EXPENSES, YOU MAY NEED TO USE MONEY FROM THIS INVESTMENT. IF YOU
DON'T HAVE AN EMERGENCY FUND, A CONSERVATIVE INVESTMENT MAY BE MORE APPROPRIATE.
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5. Do you have an emergency fund? (savings from three to six months after-tax income)
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6. If you expect to have other major expenses (such as university tuition,
house repairs, etc.), do you have a separate savings plan for these expenses?
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What is your attitude towards risk?
Questions 7 & 8:
PRIOR INVESTMENT EXPERIENCE CAN HELP DETERMINE YOUR ATTITUDE TOWARD INVESTMENT RISK. IF YOU'VE HAD EXPERIENCE WITH DIFFERENT INVESTMENTS AND YOU ARE COMFORTABLE WITH DIFFERENT TYPES OF RISK, YOU CAN BETTER ASSESS YOUR RISK TOLERANCE.
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7. Have you ever invested in individual bonds or bond mutual funds?
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8. Have you ever invested in individual stocks or stock mutual funds?
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Questions 9 & 10:
YOUR COMFORT LEVEL WITH INVESTMENT RISK IS IMPORTANT AS TO HOW
AGGRESSIVELY OR CONSERVATIVELY YOU CHOOSE TO INVEST. THE COMFORT LEVEL YOU CHOOSE SHOULD BE BALANCED WITH YOUR DESIRE TO ACHIEVE YOUR INVESTMENT GOALS.
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9. Which ONE of the following statements describes your feelings towards choosing an investment? |
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10. If you could increase your chances of improving your returns by taking more risk, would you:
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How long can you afford to tie up this money? (Time is a very important factor in determining your strategy for any single investment.)
Questions 11 & 12:
DETERMINING THE TIME FRAME FOR YOUR INVESTMENT IS CRITICAL TO MAKING AN INVESTMENT DECISION. OVER TIME, CERTAIN TYPES OF INVESTMENTS OUTPERFORM OTHERS. HISTORICALLY, STOCKS OUTPERFORM BONDS AND SHORT-TERM INVESTMENTS OVER LONG PERIODS. SO THE LONGER
YOU'RE PUTTING MONEY AWAY, THE MORE IMPORTANT IT IS TO PLACE SOME IN GROWTH INVESTMENTS.
SHORT-TERM MONEY BELONGS IN MORE CONSERVATIVE INVESTMENTS LESS SUBJECT TO FLUCTUATIONS. THE LONGER YOUR MONEY CAN SIT AND TAKE ADVANTAGE OF MARKET CYCLES, THE MORE AGGRESSIVE YOU MAY WANT TO BE.
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11. In approximately how many years do you expect to need the money you're investing?
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12. Do you expect to withdraw more than one-third of the money in this account within ten years? for a home purchase, university tuition or other major needs.)
If Yes, when do you expect to withdraw from this account?
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Total points for questions 1 through 12
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STEP 2: MATCH YOUR SCORE TO A SUGGESTED PORTFOLIO
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Now that you've added up your total points for all twelve questions, simply match that number
with the chart below. Please note that if have a very short time frame, you may want to be more
conservative than your score suggests.
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STEP 3: CREATE YOUR OWN PORTFOLIO
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Now that you've matched your total score with the charts above, you will have a better idea of
what mix of investments to consider. Review
the above score and any additional information
which you think might impact on your financial plans.
Do this with your financial adviser/consultant from Funds International Limited.
Thank You.
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