Quiz Thyself to Know Thyself: Risk Tolerance Quiz
The key to successful investing is to determine how much risk you can handle, taking into consideration:
• Your future obligations, such as children, a mortgage, or a business.
• Your liquidity constraints. If you don’t have health insurance and you break your leg, for example, you’ll need cash to cover the medical bills.
• Your growth requirements, such as the standard of living you want to maintain when you retire. Social Security probably won’t do it for you, so you’ll need some investments that really grow, such as stocks.
• Your investment objectives (which we’ll delve into in the next chapter).
• Your investment philosophy; in other words, how willing are you to take risk?
But how do ...