Module 03 Course Project

Investor Suitability and Risk Tolerance 4

Self-Assessment.

From the self-assessment risks in the questionnaire, there is an implication that I have short term, medium term, and long term financial goals:

Short –term goal

Buy some insurance to protect your assets and life. In case of a lottery of $50,000 jackpot, allocate the extra money in bank and share market. Best to use short-term deposit through some investment. It is likely to plan to go Las Vegas if you have an investment in IRA or 401k, but from the risk analysis, the investment cannot save for the travel, failing to consider investing $50,000 windfall shows that there is risk avoidance and focuses on being conservative because no experience as an investor . It is advisable to diversify the investment to reduce the financial risk.

Medium term goal

Pay off the mortgage as soon as possible.

Long-term goal

Retire debts-free when turns 65. The retirement income of 30% percentage.

Interviewee’s Risk analysis

You are providing three periodic goals in your life, which basing on your needs and wants. For your short-term goals, you want to invest some money in share market to diversify the investment to reduce the financial risk. You need buy some insurance to protect your life, your assets. For your short-term goals, in case you have lottery you will immediately travel to Las Vegas, because you are already saving on IRA and 401k which will save you and you do not need to use all the money on travel. Your mortgage loan increases preservation in assets, and it is payable through income and growth in stock market. And, you have more than 20 years to work. The interviewee focuses on being a seasoned and aggressive investor and save on personal investment and property.

Risk Tolerance

For the purpose to help you to develop better a financial plan based on the information already provided. Before satisfying your needs and wants, you must know what financial risk is. After that, one will be in a position to know whether you are under risk or not and be able to weigh the level of risk you will suffer. This analysis can help the respondents to know at what level of risk tolerance they are in and what they can bear. Another thing you should know is that the higher risk you have taken, the higher return you will get. According to this, you must make a decision on what level of risk depending on your income, investment growth, and what you preserve in assets; this plays a significant role in prepare financial plan. To help us to develop a financial plan, you should take a regular financial risk tolerance assessment. In this assessment contains some question in the questionnaire that according to assessment show some connection with the experience on investment.

Given that my payments in saving and investment are low within the first 6 to 12 months, the risk assessment shows you are risk averse unlike interviewee who within this period have heavily. Interviewee prefers to deposit money in the bank rather than buy some share or bonds increases your investment and hence becoming moderate risk conversant. This indicates that you prefer to take a low risk rather than higher. However, you have the experience in share market, if you want to put some extra money in stock market ($50,000), this can adjust your allocation by increasing your growth to approximately 65 percent qualifying to be aggressive since there is higher risk.

As the basic tool, the information presented in the pie-charts takes personal information, needs and goals are the main parts to determine your risk tolerance. Some specific and professional calculation need to be taken into account in this personal financial plan, so it is difficult to make recommendation on your choice of investment. We must assess whether you are a conservative, balanced or aggressive investor or not.