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“Nothing happens without risk, but without risk, nothing happens!”

~Walter Scheel


While risk cannot be avoided with investing, it can AND should be understood by investors. This understanding can help prevent investors from turning a “realized loss” into a “recognized loss.” This is a critical distinction that can have a large (positive or negative) impact on long-term investing success. Click below to learn more!


IAG is committed to providing investors with their desired peace of mind. Our investing convictions, rooted in academic theory and years of experience, is to equip clients with the knowledge and tools to improve their odds of achieving investing success over the long term with the least amount of risk.

Personal Details
 
 
 
 
A real gambler
Willing to take risks after completing adequate research
Cautious
A real risk avoider
 
$1,000 in cash
A 50% chance at winning $5,000
A 25% chance at winning $10,000
A 5% chance at winning $100,000
 
Cancel the vacation
Take a much more modest vacation
Go as scheduled, reasoning that you need the time to prepare for a job search
Extend your vacation, because this might be your last chance to go first-class
 
Loss
Uncertainty
Opportunity
Thrill
 
Deposit it in a bank account, money market account, or an insured CD
Invest it in safe high quality bonds or bond mutual funds
Invest it in stocks or stock mutual funds
 
Not at all comfortable
Somewhat comfortable
Very comfortable
 
$200 gain best case; $0 gain/loss worst case
$800 gain best case; $200 loss worst case
$2,600 gain best case; $800 loss worst case
$4,800 gain best case; $2,400 loss worst case
 
Invest ALL in a savings account or money market mutual fund
Invest ALL in a mutual fund that owns stocks and bonds
Invest ALL in a portfolio of 15 common stocks
Invest ALL in commodities like gold, silver, and oil
 
A sure gain of $500
A 50% chance to gain $1,000 and a 50% chance to gain nothing
 
A sure loss of $500
A 50% chance to lose $1,000 and a 50% chance to lose nothing
 
60% in low-risk; 30% in medium-risk; 10% in high-risk
30% in low-risk; 40% in medium-risk; 30% in high-risk
10% in low-risk; 40% in medium-risk; 50% in high-risk
 
Some experts are predicting prices of assets such as gold, jewels, collectibles, and real estate (hard assets) to increase in value; bond prices may fall, however, experts tend to agree that government bonds are relatively safe. Most of your investment assets are now in high-interest government bonds. 
Hold the bonds
Sell the bonds, put half the proceeds into money market accounts, and the other half into hard assets
Sell the bonds and put the total proceeds into hard assets
Sell the bonds, put all the money into hard assets, and borrow additional money to buy more
 
Your trusted friend and neighbor, an experienced geologist, is putting together a group of investors to fund an exploratory gold mining venture. The venture could pay back 50 to 100 times the investment if successful. If the mine is a bust, the entire investment is worthless. Your friend estimates the chance of success is only 20%. 
Nothing
One month's salary
Three month's salary
Six month's salary
 
Source: Grable, J. E., & Lytton, R. H. (1999). Financial risk tolerance revisited: The development of a risk assessment instrument. Financial Services Review, 8, 163–181.
 
 
This field is calculated automatically and cannot be edited.
0Score

Risk tolerance results are scaled from 0 to 100, with 0 being the least comfortable taking financial risk and 100 the most comfortable.

Risk Tolerance Very Low Low Moderate High Very High
Score 0 - 42 43 - 50 51 - 62 63 - 70 71 - 100


The results help determine your willingness to lose some or all of an investment in exchange for greater potential returns. Investors generally differ in the amount of risk they feel comfortable taking. While some people embrace risk, others may tend to avoid it at all cost.

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Impact Advisors Group
bjordan@impactadvisorsgroup.com
+1 781-291-3001
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