Test Your Risk Tolerance

Before you can decide on a personal investment strategy, you need to consider how much or how little risk you are prepared to take with your money.

Suitability

Your risk profile fits into the overall issue of suitability. Every registered investment advisor in Canada is required by law to recommend only investments that are appropriate for an investor’s goals and financial situation. Investment advisors must also create a “risk profile” for an investor, which combines their level of risk tolerance as well as their ability to withstand losses. Go to the Know Your Advisor section to find out more about working with a registered investment advisor.

Factors that Affect Your Risk Profile

• Time Horizons – The amount of time you have to meet your financial goals and to make up for any losses you might experience. People with long time horizons may be more willing to accept more risk than those who are saving to meet a short-term financial goal.
• Cash Requirements – The extent to which you depend on your investments to meet day-to-day expenses. Investors who rely on their investments to meet daily living expenses will be much less comfortable with the risk of losses.
• Emotional Factors – Your emotional response to changes in the value of your investments. Some people are quite comfortable with the ups and downs of the market, while others lose sleep when their investments fluctuate in value.

Risk Test

Take our Risk Test to help determine how much risk you feel comfortable with.