Risk Profile Questionnaire

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Investing Requires Risk!

In theory, risk-free investments do exist and they provide investors with the risk-free rate of return. The Risk Free rate is one that can be earned with certainty. In the US, T-bills (1-month or 3-month) are commonly used to benchmark the return available for risk-free investors. Of course even conservative T-Bills carry some risk. NZ government equivalents are deemed to carry more risk than US T-Bills.

Investing in anything that has an expected return greater than the risk free rate assumes real risk. Risk can manifest itself in many ways, but the most common and painful method is declining portfolio value and capital loss. This questionnaire has been designed to help us understand your Risk tolerance. This includes your need to accept market risk and willingness to endure fluctuations in your portfolio value to achieve your investment goals.

This document, combined with your investment goals and other financial information will be used to determine your investment strategy and portfolio design.

Important considerations when determining your Risk Profile:

Your Time Horizon

When will you begin to withdraw money from your account? How quickly will the money be withdrawn? If your account will be used to purchase a home, business, or vehicle in the near future (less than 5 years), portfolio preservation will be the priority. If this date is many years away, you may be more comfortable with a portfolio that has a higher level of risk in exchange for a greater expectation for appreciation. You will have more time to invest and will be able to withstand the inevitable ups and downs.

Your Risk Tolerance

How do you feel about market volatility? How do you feel about the possibility of your portfolio decreasing in value?

When you invest, there is always a risk-reward relationship. To earn a higher return, investors must assume more risk. While our portfolios are globally diversified into numerous shares, multiple sectors and industries all over the world; they will still fluctuate in value.

How to make your choice:

Answer the questions on the following pages to determine your risk profile.

Section 1: Time Horizon

1. I plan to begin regularly withdrawing money from my investments within:
Your Answer		Points
a.	Less than 3 years	1
b.	3-5 years	3
c.	6-10 years	7
d.	11 years or more	10

2. Once I begin withdrawing funds from my investments, I plan to spend all of the funds within:
Your Answer		Points
a.	Less than 5 years	0
b.	Between 5-10 years	1
c.	Between 10-15 years	4
d.	More than 15 years	8

Subtotal: Time Horizon Score

Add your total points from questions 1 & 2 above to get your Time Horizon Score

Your Time Horizon Score: points (add points for answers 1 and 2)

Section 2: Risk Tolerance

3. I would describe my knowledge of investments as:
Your Answer		Points
a.	None	0
b.	Limited	2
c.	Good	4
d.	Extensive	6

4. Which of the following best describes your view of your retirement savings:
Your Answer		Points
a.	I am concerned about my investments losing value	0
b.	Equally concerned about my investments losing value and that they gain value	4
c.	Most concerned that my investments do gain value	8

5. Select the investments you have owned in the past with the highest point value:
Your Answer		Points
a.	Money markets or Cash	0
b.	Bonds and/or Bond Funds	3
c.	Shares and/or Share Funds	6
d.	International Shares and/or International Funds	8

6. What would you do?: Imagine that in the past three months, the overall share market lost 25% of its value. As a result, your portfolio lost 25%. What would you do?
Your Answer		Points
a.	Sell all of my shares	0
b.	Sell some of my shares	1
c.	Do nothing	5
d.	Buy more shares	8

7. Best Case / Worst Case. The following chart outlines possible best and worst case annual returns of four hypothetical investment portfolios. Which range of possible outcomes is the most tolerable to you? Best and Worst- Case Scenarios (1 Year returns)
Portfolio	Average Annual Return	Best Case	Worst Case	Points
Portfolio A	6.10%	+12.00%	-4.00%	0
Portfolio B	7.30%	+20.00%	-14.00%	4
Portfolio C	9.00%	+35.00%	-25.00%	7
Portfolio D	10.20%	+45.00%	-32.00%	10

Subtotal: Risk Tolerance

Add your total points from questions 3 - 7 above to get your Risk Tolerance Score

Your Risk Tolerance Score: points (add points for answers 3 to 7)

Determine Your Risk Profile

The chart below uses the subtotals from the preceding two sections. To use the chart, find your Time Horizon along the left side and your Risk Tolerance Score across the top. Locate the intersection point. This determines your Investor Profile.

chart

Please select the Risk Profile that matches your Investor Profile:

Yes I hereby acknowledge that the above investment risk profile is consistent with my investment risk requirements. I have had the concept of investment risk explained to me and am happy to proceed on this basis.

No The above investment risk profile is not consistent with my risk requirements and the profile which I hereby nominate is:

I/we give permission for this information to be used for the preparation of my/our financial plan and I/we understand that the planning and investment recommendations will be based on the information supplied in this form and the data collection form.

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