Investment Time Horizon & Risk Tolerance Questionnaire

Instructions

  • Please answer all of the following questions selecting only one response for each question.
  • Your answers to these questions should pertain only to this investment (Portfolio).
  • All owners must sign and date this questionnaire

Time Horizon

When do you expect to begin regularly withdrawing money from this portfolio for living expenses? Please ignore required minimum distributions for the purposes of this question.

After you begin withdrawing money from this portfolio, what is the longest period over which these withdrawals may need to last? Typically this is at least your joint life expectancy, or if gifting a large portion of your assets, the period over which beneficiaries would receive the money.

Risk Tolerance

Inflation, the rise in prices over time, can erode investment return. Investors should be aware that if investment returns are less than the inflation rate, then the ability to purchase goods and services in the future (i.e., purchasing power) might actually decline. In order to maintain purchasing power, investment returns must at least equal, or preferably exceed, the rate of inflation. Generally, higher returns can only be achieved by accepting greater risk or volatility (i.e. more fluctuations in the value of a portfolio).

Which of the following portfolios is most consistent with your investment philosophy?

How long would your current cash reserves last if you needed to use them for living expenses?

Investing involves a trade-off between risk (or volatility) and return. Historically, investors who have received higher long-term average returns have experienced larger fluctuations in the value of their portfolios and more frequent short-term losses.

Considering the above, which statement best describes your investment goals?

Historically markets have experienced downturns, both short-term and prolonged, followed by market recoveries. Suppose you owned a well-diversified portfolio that declined by 20%, consistent with the overall market performance (i.e. a $100,000 portfolio would now be worth $80,000). Assuming you still have 10 years until you begin withdrawals, how would you react?

The following graph shows the best, average, and worst one-year return that investors might expect in the first year after investing $100,000 in each of 5 hypothetical portfolios. Note that the portfolio with the best potential gain also has the largest potential loss. The results are not intended to represent the returns of actual portfolios and are being used only to measure your tolerance for risk or volatility versus long-term returns. Past performance is no guarantee of future results.

Which of these portfolios would you prefer to hold?

Question7