What’s your super risk profile? (Quiz)

Remember that your answers could change as you get older and closer to retirement, or when you’re thinking about different investments. You could try the quiz when thinking about your super and then take it again when thinking about investing outside super to see if your attitude to risk varies. 

1. Which of the following statements best summarises your objective?

1. Achieving a stable, predictable return is my highest priority
2. I prefer predictable returns, but I am OK with some fluctuations if my balance will grow faster
3. Investment growth is more important than stability
4. My first priority is high returns, even if they fluctuate significantly, including negative years

2. How important is it to you that your investment keeps pace with inflation (i.e. retains its purchasing power)?

1. Not important – I would keep it under the mattress if I could
2. Slightly important – just keeping pace is OK
3. Fairly important – I’d like my return to beat inflation and generate some growth in purchasing power
4. Critical – my priority is to grow my savings significantly more than inflation

3. How long would you be prepared to wait for your investment to return to its original value after making an investment loss?

1. No time at all. I can’t tolerate a loss
2. 1 year. A short-term loss is ok
3. 3 years
4. 5 or more years

4. How do you plan to use your super after retirement? (for super only)

1. Take a lump sum to repay debts or spend immediately
2. Spend it within 5 years
3. Spend most of it within 15 years
4. Draw on it evenly throughout retirement

5. How much would you be prepared to lose in a market downturn?

1. Nothing
2. 3% of my investment
3. 7% of my investment
4. 10% or more of my investment

6. Would you consider borrowing to invest?

1. No
2. Maybe
3. It depends on the investment
4. Definitely yes

7. How often could you live with your portfolio having a negative year?

1. Never
2. Once every 15 years
3. Once every 8 years
4. Once every 5 years

8. How long are you investing for?

1. 5 years
2. 10 years
3. 15 years
4. 20 years or more

9. What would you do with a $20,000 windfall?

1. Keep it in a term deposit
2. Split it between a savings account and an ASX 200 index fund
3. Invest it in a diversified equity portfolio
4. Invest it in some interesting alternative assets with a high-return profile

10. If your investment fell in value by 20%, what would you do?

1. Switch my whole balance to cash
2. Move some of my investment into more stable assets
3. Do nothing and expect the investment to recover
4. Invest more money to take advantage of low asset prices

Your risk profile results

Mostly A – Defensive

If you chose mostly A, then you are very concerned by any prospect of losing money. This is an important consideration when choosing your investment profile and knowing this will help you steer away from investments that make you nervous.

Mostly B – Conservative

You’re more comfortable with risk but still don’t want to take on too much, regardless of the potential return. A conservative risk profile means you are focused on preserving the value of your investments and existing investment income.

Mostly C – Moderate

You are looking for the higher returns that a higher risk profile will deliver. You are comfortable with a year of negative returns here and there, as you know that you will be able to recoup your losses over future years.

Mostly D – Aggressive

You prefer to invest in assets that have a higher risk as there is a higher chance of return. You can tolerate big falls in your investments because you understand that with the risk levels you are comfortable with, you will be able to recoup your losses (and then some) over the longer term.