Please select the option that best describes how you feel about each question. If no option is exactly right for you, choose the one that is closest.
9. Experts tell us that as the value of investments can go up and down, we should be prepared to weather a downturn.
How upset would you be if the value of your investments fell by the following amounts in one year? (1 = not at all upset, 5 = very upset).
There is a 50:50 chance that the investment will decrease in value, in which case you could end up with an amount as low as that shown in the left- hand box. Likewise, there is a 50:50 chance that it will increase in value, in which case you could end up with an amount as high as that shown in the right-hand box. For example, Investment A will always result in you ending up with your original sum of £20,000, whilst Investment F could result in between £14,000 and £52,000. As you go from A to F your expected return increases but so does your risk.
Portfolio A doubled its value over the period, but it made big gains in some years, and suffered big losses in other years. Portfolio D grew by a much smaller amount, but it was steady from year to year. Portfolios B & C are intermediate between A and D both in their overall growth and in year to year fluctuations.
This question should only be considered in the context of your overall assessment of risk tolerance because PAST PERFORMANCE IS NOT
A RELIABLE GUIDE TO FUTURE PERFORMANCE. You should not use information about the past to make decisions about the future.
However, considering your personal circumstances and reasons for investing (pension, income, growth etc.), which portfolio would you choose for the future?