What Kind of Investor Am I?

Determining your risk tolerance is an important aspect of planning for the retirement of your dreams. Part of that planning involves choosing the investments for your retirement plan account that you feel are right for you—and your risk tolerance is an important factor for you to consider when choosing your investments. Risk tolerance can be defined as how comfortable you are with short-term swings in the market. Your risk tolerance, along with your financial needs and expectations, determines what is called your “Investor Style.”

Identifying Your Investor Style

Generally, most people fall into one of three Investor Style categories:

Conservative
  • Concerned about short-term ups and downs in the market
  • Wants to minimize risk and maintain principal
  • Seeks stability and little fluctuation in the value of investments
Moderate
  • Willing to sacrifice safety of principal for potentially greater returns
  • Can tolerate modest market fluctuations
  • Concerned with safety, but wants to stay ahead of inflation
Aggressive
  • Seeks to maximize investment returns
  • Can tolerate substantial market fluctuations
  • Accepts greater risks in exchange for prospect of greater rewards

The following questions1 can help you determine your Investor Style:

Please indicate how concerned you are by circling the score next to your answer.

1) The possibility that I won’t achieve a high enough rate of return over the long term.

I am very concerned 10
I am somewhat concerned 7
I am not concerned 7

2) The loss of “buying power” or “quality of life” from the effects of inflation.

I am very concerned 6
I am somewhat concerned 4
I am not concerned 1


3) Wide swings in the value of my account over 1–3 months.

I am very concerned 0
I am somewhat concerned 4
I am not concerned 12


4) Wide swings in the value of my account over 1–2 years.

I am very concerned 2
I am somewhat concerned 6
I am not concerned 12


5) Which of the following causes you the most concern about the investments in your account?

My future ability to get back at least the same amount of money that I put in 2
That my money is not earning enough 6
How much I have gained or lost this month 0


6) One of the investments in your plan has performed very well for a few years. If it suddenly dropped 15 percent in 3 months, what would you do?

Sell immediately 0
Hold it 6
Buy more 8


Your experience with various investments can affect your comfort with the investments in your retirement account. In questions 7 – 10, please indicate the level of your experience and comfort with the following investment categories:

7) Your experience with stock investments.

A great deal 6
A fair amount 4
Very little 2
None

1


8) Your comfort level with stock investments.

A great deal 12
A fair amount 10
Very little 4
None 0


9) Your experience with bond investments.

A great deal 5
A fair amount 3
Very little 2
None 1


10) Your comfort level with bond investments.

A great deal 7
A fair amount 4
Very little 3
None 0

Please add up the points corresponding to each of your answers to determine your total score.

TOTAL SCORE:
CONSERVATIVE 0 – 40 POINTS
MODERATE 41 – 60 POINTS
AGGRESSIVE 61+ POINTS

Choosing Your Mix of Investments

Once you’ve identified your Investor Style and your number of years to retirement (simply subtract your current age from your desired retirement age to obtain this number), you are ready to determine your mix of investments. The sample portfolios below show the approximate ratio of stable value, fixed income, and stock/equity investments that correspond to certain Investor Styles and years to retirement. You can use the information from the sample portfolios to help you determine a mix of investments from among those options in your retirement plan. (Your plan's investments may vary.) Or, you can apply your own investment choices. It’s easy to make changes to your account either online or by telephone.

What kind of investor am I?

To Select or Change Your Investments

Visit the online retirement center at www.prudential.com/online/retirement

Or

Refer to your retirement statement to obtain your toll-free number to contact Prudential.  Have your account number and Personal Identification Number (PIN) available when you call.  Retirement account representatives are available Monday through Friday, 8 a.m. to 9 p.m, ET. Your account information is also available by phone 24 hours a day, 7 days a week.

As your goals and years to retirement change, you can select a new portfolio at any time.

The Assistance You Need

You may wish to consult a financial professional for assistance on retirement planning. If you prefer, a Prudential Retirement® Counselor2 can assist you. Simply call
1-877-PRU-2100 toll free, Monday through Friday, from 8 a.m. to 6 p.m., ET.

 

1This questionnaire is designed to be used as a guide only and is not intended as financial advice. Your financial decisions should not be based solely on the score you have obtained using the questionnaire.

2Retirement Counselors are registered representatives of Prudential Investment Management Services, LLC (PIMS).

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