Download Attitude to Risk: Question Text 1. I would enjoy exploring investment

Attitude to Risk: Question Text
Please answer the following questions which ask about your thoughts, attitudes and experiences when
making financial investments and decisions. There are no right or wrong answers. They are to help us
assess your attitude to risk in making investments.
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Read each question and choose the answer that best describes you.
Don’t spend too much time considering – your first response is probably best.
Answer every question even if you feel it doesn’t really apply to you.
If you want to change your answer simply amend the questionnaire to show your preferred answer.
1. I would enjoy exploring investment opportunities for my money.
a. I strongly agree with this statement
b. I tend to agree with this statement
c. In between
d. I tend to disagree with this statement
e. I strongly disagree with this statement
2. I would go for the best possible return even if there were risk involved.
a. Always
b. Usually
c. Sometimes
d. Rarely
e. Never
3. Compared to other people, how would you describe your typical attitude when making important
financial decisions?
a. Very adventurous
b. Fairly adventurous
c. Average
d. Fairly cautious
e. Very cautious
4. If I had money invested in shares I would be nervous about the stock market falling in the short
term.
a. I strongly agree with this statement
b. I tend to agree with this statement
c. In between
d. I tend to disagree with this statement
e. I strongly disagree with this statement
5. Compared to others, what amount of risk have you taken with your past financial decisions?
a. Very Large
b. Large
c. Medium
d. Small
e. Very small
6. To reach my financial goal I prefer an investment which is safe and grows slowly but steadily,
even if it means lower growth overall.
a. I strongly agree with this statement
b. I tend to agree with this statement
c. In between
d. I tend to disagree with this statement
e. I strongly disagree with this statement
7. When I consider investments that have an element of risk I feel quite anxious.
a. I strongly agree with this statement
b. I tend to agree with this statement
c. In between
d. I tend to disagree with this statement
e. I strongly disagree with this statement
8. Imagine that six months after making an investment the financial markets start to perform badly.
In line with this, your own investment goes down by a significant amount. What would your
reaction be?
a. Withdraw your money and put it in a savings account to prevent any further losses
b. Transfer your money to a more secure investment product to reduce the risk of further losses
c. Monitor the investment and wait to see if it improves
d. Invest more funds to take advantage of the lower price, expecting future growth
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9. I am looking for high investment growth. I am willing to accept the possibility of greater losses to
achieve this.
a. I strongly agree with this statement
b. I tend to agree with this statement
c. In between
d. I tend to disagree with this statement
e. I strongly disagree with this statement
10. I usually feel confident where money is concerned.
a. I strongly agree with this statement
b. I tend to agree with this statement
c. In between
d. I tend to disagree with this statement
e. I strongly disagree with this statement
11. If you had money to invest, how much would you be willing to place in an investment with
possible high returns but an equal element of risk?
a. All of it
b. More than half
c. Half
d. Less than half
e. None
12. How would a close friend describe your attitude to taking financial risks?
a. Daring
b. Sometimes daring
c. A thoughtful risk taker
d. Careful
e. Very cautious and risk averse
13. If you had spare funds to invest, would you choose a risky investment for the excitement of
seeing how it would perform?
a. Definitely
b. Very likely
c. Possibly
d. Unlikely
e. Very unlikely
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14. If you had picked an investment with potential for large gains but also the risk of large losses
how would you feel:
a. Panicked and very uncomfortable
b. Quite uneasy
c. A little concerned
d. Accepting of the possible highs and lows
e. Excited by the potential for gain
15. Imagine that you have some money to invest and a choice of two investment products, which
option would you choose?
a. A low average annual return but almost no risk of loss of the initial investment
b. A higher average annual return but some risk of losing part of the initial investment
c. A mixture of the above
16. I would prefer small certain gains to large uncertain ones
a. I strongly agree with this statement
b. I tend to agree with this statement
c. In between
d. I tend to disagree with this statement
e. I strongly disagree with this statement
17. When considering a major financial decision which statement BEST describes the way you
think about the possible losses or the possible gains?
a. I’m excited about the possible gains
b. I’m optimistic about possible gains
c. I think about both the possible gains and losses
d. I am conscious of the possible losses
e. I worry about the possible losses
18. I want my investment money to be safe even if it means lower returns
a. I strongly agree with this statement
b. I tend to agree with this statement
c. In between
d. I tend to disagree with this statement
e. I strongly disagree with this statement
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Scoring algorithm
The following grid shows the score to be allocated for each question response.
Q1
Q2
Q3
Q4
Q5
Q6
Q7
Q8
Q9
Q10
Q11
Q12
Q13
Q14
Q15
Q16
Q17
Q18
Total Score
A
5
5
5
1
5
1
1
1
5
5
5
5
5
1
1
1
5
1
B
4
4
4
2
4
2
2
2
4
4
4
4
4
2
3
2
4
2
C
3
3
3
3
3
3
3
3
3
3
3
3
3
3
2
3
3
3
D
2
2
2
4
2
4
4
4
2
2
2
2
2
4
n/a
4
2
4
E
1
1
1
5
1
5
5
n/a
1
1
1
1
1
5
n/a
5
1
5
Question Score
Total score is sum of 18 question responses.
Minimum possible score = 18
Maximum possible score = 87
Allocation of total scores to risk categories is shown in next table.
Risk Category
Risk Category Label
Score Range
1
Very Cautious
18-28
2
Cautious
29-33
3
Low end of Cautious to Moderate
34-37
4
Cautious to Moderate
38-42
5
Low end of Moderate
43-47
6
Moderate
48-54
7
Low end of Moderate to Adventurous
55-60
8
Moderate to Adventurous
61-67
9
Adventurous
68-74
10
Very Adventurous
75-87
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Risk Definitions
You are prepared to take only a small amount of investment risk and it is
important to you that your capital is protected.
Very
Cautious
This means that your portfolio will concentrate on investments which provide
low returns in the long term but present no risk to your capital. Only a small
amount of riskier assets will be included in your portfolio in order to increase
the chance of obtaining better long term returns.
A typical Cautious investor will be invested mostly in fixed interest and cash
with a small element (up to about one third) in equities and property which
can boost longer term returns but are associated with more risk. Because
you are a Very Cautious investor there will be slightly more invested in fixed
interest and cash. The range of assets provides diversification benefits
which also help to reduce the overall risk.
You are prepared to take only a small amount of investment risk and it is
important to you that your capital is protected.
Cautious
This means that your portfolio will concentrate on investments which provide
low returns in the long term but present no risk to your capital. Only a small
amount of riskier assets will be included in your portfolio in order to increase
the chance of obtaining better long term returns.
A typical Cautious investor will be invested mostly in fixed interest and cash
with a small element (up to about one third) in equities and property which
can boost longer term returns but are associated with more risk. The range
of assets provides diversification benefits which also help to reduce the
overall risk.
You are prepared to take a limited investment risk in order to increase the
chances of achieving a positive return but you only want to risk a small part
of your capital to achieve this.
A typical Cautious to Moderate portfolio will have up to half invested in fixed
Low end of interest products which are low risk but have low returns. The larger part of
Cautious to the portfolio will be invested in equities and property which can boost longer
Moderate
term returns but are associated with more risk. Because you are a Low end
of Cautious to Moderate investor there will be slightly more invested in fixed
interest and cash.
The range of assets provides diversification benefits which also help to
reduce the overall risk.
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You are prepared to take a limited investment risk in order to increase the
chances of achieving a positive return but you only want to risk a small part
of your capital to achieve this.
A typical Cautious to Moderate portfolio will have up to half invested in fixed
Cautious to
interest products which are low risk but have low returns. The larger part of
Moderate
the portfolio will be invested in equities and property which can boost longer
term returns but are associated with more risk.
The range of assets provides diversification benefits which also help to
reduce the overall risk.
You are prepared to take a moderate amount of investment risk in order to
increase the chance of achieving a positive return. Capital protection is less
important to you than achieving a better return on the investment.
A typical moderate investor will usually invest in a variety of assets to obtain
Low end of diversification. There would be a substantially higher proportion of equities
Moderate
and property compared to fixed interest and cash. Because you are a Low
end of Moderate investor there will be slightly more invested in fixed interest
and cash.
The range of asset types helps reduce the overall risks as well as increasing
the chance of better returns.
You are prepared to take a moderate amount of investment risk in order to
increase the chance of achieving a positive return. Capital protection is less
important to you than achieving a better return on the investment.
Moderate
A typical moderate investor will usually invest in a variety of assets to obtain
diversification. There would be a substantially higher proportion of equities
and property compared to fixed interest and cash.
The range of asset types helps reduce the overall risks as well as increasing
the chance of better returns.
You are prepared to take a medium degree of risk with your investment in
return for the prospect of improving longer term investment performance.
Short term capital protection is not important to you and you are willing to
Low end of sacrifice some long term protection for the likelihood of greater returns.
Moderate to
Adventurous A typical Moderate to Adventurous investor will be invested mainly in
equities but with other assets included to provide some diversification.
There may be a small amount of specialised equity within the portfolio.
Because you are a Low end of Moderate to Adventurous investor there will
be slightly more invested in fixed interest and cash.
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You are prepared to take a medium degree of risk with your investment in
return for the prospect of improving longer term investment performance.
Short term capital protection is not important to you and you are willing to
Moderate to
sacrifice some long term protection for the likelihood of greater returns.
Adventurous
A typical Moderate to Adventurous investor will be invested mainly in
equities but with other assets included to provide some diversification.
There may be a small amount of specialised equity within the portfolio.
You are prepared to take a substantial degree of risk with your investment in
return for the prospect of the highest possible longer term investment
performance.
You appreciate that over some periods of time there can be significant falls,
Adventurous as well as rises, in the value of your investment and you may get back less
than you invest. This strategy holds significant risk in the shorter term.
A typical Adventurous investor will be invested entirely in equities, both in
the UK and overseas. There may be a significant proportion of the
investment in specialised equities.
You are prepared to take a substantial degree of risk with your investment in
return for the prospect of the highest possible longer term investment
performance.
You appreciate that over some periods of time there can be significant falls,
Very
as well as rises, in the value of your investment and you may get back less
Adventurous than you invest. This strategy holds significant risk in the shorter term.
A typical Adventurous investor will be invested entirely in equities, both in
the UK and overseas. There may be a significant proportion of the
investment in specialised equities. Because you are a Very Adventurous
investor there will be slightly more invested in specialised equities.
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Additional Questions
1. Is this investment a significant proportion of your total wealth?
If Yes, please provide further detail below
Yes/No
2. Is this investment providing your daily living expenses?
If Yes, please provide further detail below
Yes/No
3. Would you need the money being invested to cover your expenses in an
emergency?
If Yes, please provide further detail below
Yes/No
4. Do you have any dependents who rely on you financially?
If Yes, please provide further detail below
Yes/No
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5. Do you have any major financial commitments that could mean you need
to access this money earlier than you currently think?
If Yes, please provide further detail below
Yes/No
6. Are you experienced in investing?
If Yes, please provide further detail below
Yes/No
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