Investor Quiz

Investing can be one of the most complicated aspects of your financial life, and the battle for sound investing is often waged in your own head. If you make investment decision without truly understanding exactly what you are doing, then you are easily susceptible to fear, anxiety, stress and confusion regarding your important investment decisions.

One of the reasons that investing may seem daunting is because many people don't know what kind of questions to ask that will help build their confidence and peace of mind.  During our coaching process, we help investor answer 20 questions that are specifically designed to help you identify the areas of investing where you can build your confidence as an investor.

Therefore, to achieve investing confidence and peace of mind, here are some of the questions every investor must be able to answer.  See if you can answer "yes" to each question. You must be 100% confident that you know the answer in order for it to qualify as a "yes" answer.

 
1. Are you invested in the market? (This should be an easy one!)



2. Do you know how markets work? (Do you understand the underlying dynamics of the market? If not, you are setting yourself up for stress and anxiety when the markets underperform.)



3. Have you defined your investment philosophy? (Do you believe that markets are efficient or do you believe that markets are inefficient, and do you understand what this means? Does your investment strategy match your investment philosophy?)



4. Have you identified your personal risk tolerance? (At what point do you become unable to "hang in there" when markets are moving downward?)



5. Do you have a system to measure diversification in your portfolio? (Do you understand what diveresification is hint, it is not just about owning lots of stocks or mutual funds? Can you measure your level of diversification numerically hint, this number is not just related to how many stocks or mutual funds you own? Will all of your holdings move down together during the next market downturn?)



6. Do you have system to measure the volatility in your portfolio? (Do you know the numerical value that represents the level of volatility in your portfolio? If you can’t measure the risk or volatility, then how can you expect to control it?)



7. Do you consistently and predictably achieve market returns? (The vast majority of investors don’t.)



8. Have you measured the total amount of commissions and costs in your portfolio? (There are often fees and expenses that are not easily visible to the investor)



9. Do you have an Investment Policy Statement? (This are the guidelines that define how your money is being invested and how success and failure in the management of your portfolio is determined. For example, qualified retirement plans require one. If it is good for them it may also be good for you.)



10. Do you know the three warning signs that you or your advisor are gambling and speculating with your money versus prudently investing it? (Most investors suffer from these damaging practices.)