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Discover your risk tolerance.

Updated: Dec 16, 2020

Knowing your risk tolerance is the first step to accomplishing pretty much everything you do in your daily life. If you break it down into little chunks of your life you use risk tolerance with pretty much everything you do. For example when you wake up in the morning and you go to the kitchen to get your breakfast even though it seems small you are risking your health. So, you decide whether to eat something healthy that may not taste great or you grab a box of cereal that is not healthy that tastes great. The risk is your health later on, but this is what we do everyday with every thing we do. Do you risk getting in your car on a snowy day just to go to work or school. These are the same principles that you will use to assess your risk tolerance for investing in real estate or other investments. Below there is a short quiz to take to analyze your risk tolerance for investing. So let's get started to see what your risk tolerance is.

What is your risk-tolerance factor? Answer the following questions:

  • Do you consider your home your best investment?

Yes or No

  • Do you regularly invest in your 401k but flinch at the thought of buying stock?

Yes or No

  • Do you avoid buying stocks during a market downturn?

Yes or No

  • Do you regard real estate investing as a high-stakes gamble?

Yes or No

  • If you have $2,000 to invest, do you put it in a CD without considering that it might earn more interest elsewhere?

Yes or No

  • Are you hoping that Social Security will provide a safety net for your old age?

Yes or No

  • Is starting your own business a prospect you would never consider?

Yes or No

  • If someone you admire asked you to enter into a business partnership that had potential, would you flat out reject the offer?

Yes or No

  • Are you fearful of losing your job because of the income loss? Do you stay awake at night worried about losing your job because you think you don’t have the skills to find another?

Yes or No

If you answered yes to all these questions, your risk tolerance is woefully low. The investor world would define low risk tolerance as the riskiest result of all, since you’re relying on your savings, your employer, and the government to take care of you. If you answered yes to only five, your risk tolerance is average. If you answered no to all, congratulations—you have the stomach for risk that could someday bring you riches. Remember, without some risk, there can be little reward.

Thanks for taking the time to fill out the quiz. Now that you have a better understanding of your risk tolerance, you are better equipped to understanding which investment is right for you. Let's sit down and discuss how this will work with your investment plans and goals.

Jessica Cress

Your Castle Real Estate


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