Tuesday, October 14, 2008

What is risky?

I’ve been reading Live It Up Without Outliving Your Money! by Paul Merriman and he had a handy little test for determining if you have taken on to much risk. Simply ask yourself the following questions: yes or no?

Have I lost sleep over my investments?
Do I feel compelled to watch the financial news?
Do I feel compelled to check fund prices daily?
Does financial new make me worry about my future?

If you answered "yes" to all of the above it's time to look at your investments!

On one hand I like this test because it is parsimonious. On the other hand, if a person doesn’t particularly understand finances and asked themselves these questions it might incite panic in times such as these. What do you think? How do you try to assess your own financial risk level?

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