Risk Profiler

Answer below questionnaire to find out risk profile of yours:

1. Do you believe luck is important in making your investment decision?
a. Yes
b. Sometimes
c. No

2. When you hear unexpected adverse or bad financial news, you
a. Stay calm
b. Rarely overreact
c. Panic

3. Would you invest in a stock based on a friend’s tip?
a. Yes
b. Maybe
c. No

4. Between a new position offering greater job security with lesser pay and another with a higher pay but less job security, which would you select?
a. Higher pay
b. Not sure
c. Greater job security

5. Would you borrow money to make an investment that might double your money?
a. Yes
b. Maybe
c. No

6. If you have invested in a stock that rose 30% within 6 months after you bought it you would
a. Do nothing or buy more shares
b. Sell some shares
c. Sell all your shares

7. If you could increase your chances of improving your returns by taking more risk, you would
a. Take more risk with 20% of your money
b. Take some risk with 10% of your money
c. Unwilling to take much more risk

8. What percentage of your household income (after tax) is spent each month paying off credit card bills, car payments and either on rent or mortgage payments?
a. More than 50%
b. Between 25% and 50%
c. Less than 25%


9. Which one of the following statements best describes your feelings about investment risk?
a. I prefer to take higher risk for better returns
b. I prefer to select a balanced mix of investments to lower my risk
c. I prefer to stay conservative with low returns

10. Do you expect your future earning over the next five years to
a. Increase
b. Stay the same
c. Decrease

11. Would you invest in individual stocks or equity (stock-base) unit trusts?
a. Yes
b. Maybe
c. No

12. If you know investing EPF fund could potentially gives you higher return, would you invest?
a. Yes
b. Maybe
c. No


SCORING
For all questions,
a = 3 points
b = 2 points
c = 1 point


Total score             Investor Profile
12-18 points               Conservative
19-29 points               Moderate
30-36 points               Aggressive

Note: By knowing your Risk Profile and Risk Capacity, you can decide your Strategy of Investment.
We will discuss about the risk capacity in next topic.

Understand Yourself as an Investor

5 simple behavior of being an Investor and NOT a Gambler in Stock


1. Opportunity vs Capital

–Selling too fast; worrying about making bad decision on selling too fast that making less money in a high earning stock

–Buying too slow; worrying miss opportunity in a Popular stocks that everyone buying (Especially on internal Tips)

Note: There is no selling too fast or buying too slow. Take time to analyse. Missing an opportunity is better then losing your capital.


2. Realised Lost vs Capital Stuck

–Emotionally affected by the purchased price of stock. Feel embarrass on a loss.
–Having the concept of; never sell never lost

Note: A lot of people just keep holding on the stocks; and never sell until it make a profit or back to cost. And this people always mention, never sell never lost


3. Best Buying / Selling Price vs Buying / Selling in GOOD Price
- Always q in the buying price or best buying price of the day
- Hesitate to buy on the selling price OR sell at the buying price

Note: Keep q in a lower / higher price cause the trade undone. The price might make much more different on the next day / hour.

4. Anchoring

–Often assume that the market price is the correct price, rely on recent market views and opinions even though it differs from historical, long-term averages and probabilities
–DON’T anchor yourself into recent performance without taking into account true historical returns: the compound historical returns

Note: Normally people will buy stocks in good time. This is a lesson to analyse on the economy cycle, look into the history and predict the FUTURE.

5. Over confident
–Believe you can consistently time the market? WOW!
–In reality, there’s an overwhelming amount of evidence that proves otherwise
–Overconfidence results in excess trades, with trading costs denting profits
Note: The feeling of having a third eye to predict a stock price without proper analysis bring you to become the best GAMBLER...