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What Type of Investor Are You?

When determining what investment options are best for your situation, it is important to ask yourself a few questions, such as:

What is my savings goal?

  • Am I saving for a larger, more expensive item, like a wheelchair or wheelchair accessible vehicle, that may require a longer savings timeline?

  • Am I hoping to use these funds to pay for a stable and ongoing expense, such as rent or health and wellness activities, that require easy access to funds at a certain time each month?

  • Am I hoping to use some of the funds to save for a larger item and some to cover ongoing monthly expenses?

What is my risk tolerance?

When investing, risk tolerance is the degree to which an investor is comfortable with his or her money fluctuating with the changes in the market.

  • Someone with a low risk tolerance would most likely invest in conservative options where there is little to no fluctuation in the initial investment and earnings. This would aim to ensure the initial investment is preserved and often results in very little interest earned.

  • Someone with a moderate risk tolerance would most likely invest in more moderate or growth options, where investments take a balanced approach and often invest in an almost equal combination of stocks (more likely to fluctuate with the stock market) and bonds (more stable). This would aim to provide moderate current income with moderate interest earned.

  • Someone with a high risk tolerance would most likely invest in more aggressive options, where the potential for higher returns (more money made on the initial investment) outweighs the risk of losing money. This would aim to provide more money earned in interest, but could also result in a loss of money (including the initial investment) depending on market conditions.

With these questions in mind, which of the descriptions below best represent your goals and comfort with risk?


If you would like to …
  • Save for a larger, more expensive item (such as a wheelchair)

  • Save over a longer period of time

If you think…
  • Market fluctuations are not a big deal

  • The potential for higher returns outweighs the risk of losing money

  • Stocks may be better than bonds and short-term investments because they have the potential to earn more interest

Aggressive Risk Tolerance: most likely prefer investment options 1 or 2


If you would like to …
  • Pay for ongoing, stable expenses (such as rent or health and wellness activities) AND potentially save for a larger, more expensive item (such as a wheelchair)

  • Maintain the money you place in your account but also have the potential to earn moderate interest

If you think…
  • An almost equal mixture of stocks and bonds is more comfortable than mostly stocks or mostly bonds

  • You can tolerate small market fluctuations

Moderate Risk Tolerance: most likely prefer investment options 3 or 4


If you would like to …
  • Primarily pay for ongoing, stable expenses (such as monthly rent or health and wellness activities)

  • Maintain the money you place in your account, even if it means your account may not earn much interest

If you think…
  • Bonds and short-term investments may be better than stocks because they are less likely to fluctuate with the market

Conservative Risk Tolerance: most likely prefer investment options 5 or 6


 

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