Developing a Financial Profile

Building a financial profile should be considered the most important first step in investing. Understanding your own psychological attitude towards money can serve you well in selecting the appropriate investment product for your portfolio. While risk tolerance tests are not scientific, they can be a indicator of your emotional feelings towards money.

Here are some basic entry-level questions for you to consider:

• How long would your non-retirement savings last in the event of a financial emergency? 0 – 3months, 4 – 6 months, 6 – 12 months, More than 12 months?
• About how much of your monthly income do you use to pay installment debt? I have no installment debt.

            Less than 25% of monthly income.

            25% - 50% of monthly income.

            More than 50% of monthly income.

How long would your non-retirement savings last in the event of a financial emergency? How would you respond to the following statement: Protecting my portfolio from loss is more important than achieving high returns.

            Strongly Agree, Agree, Risk and Return are Equally Important, Disagree or     Strongly Disagree?

From an original investment of $40,000, your portfolio now worth $80,000 suddenly drops by 20%, or $16,000. How would you react?

• Sell the investment entirely?
• Make no adjustments?
• Make additional purchases to the current portfolio?
• Try to avoid the investment that may drop 20%?

Your portfolio from the previous question, now worth $64,000, suddenly drops another 15%, or $9,000. Now how would you react?

• Sell the investment entirely?
• Make no adjustments?
• Make additional purchases to the current portfolio?
• Try to avoid the investment that may drop 20%?

Asset Allocation may be applied to each of your different investments. A separate profile should be completed for each investment within your portfolio. Meet with a financial professional to review your profile and ensure that your answers are consistent with your goals.