Test Your Risk Tolerance

How much or little investment risk are you comfortable with? Take our Risk Test to find out. 

Investment risk is the amount of uncertainty about the expected return from an investment. It’s possible for the investment to lose money or become worthless.

Before you can decide on a personal investment strategy, you need to consider your risk profile and your unique financial circumstances that may impact it.

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. 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.

  1. Your best friend says his uncle will give you a chance to invest in a gold property in northern BC. He says the investment will double before the end of the year. What do you do?
  2. Your boss is going to pay a year-end bonus and gives you a choice between $500 cash or $600 in company stock. You can’t sell the stock for at least 12 months, and in that time the stock price could go up or down. What do you do?
  3. A friend invites you to join a hockey pool with a $20 buy-in. You could win over $500. What do you do?
  4. Your parents decide to give you an early inheritance of $10,000, asking that you invest it wisely. What do you do?
  5. A stock you bought over a year ago has suddenly increased in value by over 40%. What do you do?