Broker Check

Investor Quiz

Must Answer Questions for Confident Investing:
These questions are based our firm belief that confidence in investing involves being an educated investor. In other words, confusion, stress and anxiety are the direct result of investing on a wing and a prayer.

Please note: To qualify as a "Yes" the answer must be 100% "Yes".

  1. Are you invested in the market? Ok, let's start with an easy one. Investing in the market, historically, has been one of the better ways to protect investors from inflation risk.
  2. Do you know how markets work? Do you understand the underlying dynamics of the market? If not, this is a recipe for a lot of stress and uncertainty when your own stocks and markets don't perform as you expected.
  3. Have you defined your investment philosophy? Have you made a choice regarding whether you believe markets work or that they fail? Is your portfolio being managed in accordance with your belief system?
  4. When it comes to building your investment portfolio do you (or your advisor) know exactly what you are doing and why?
  5. Do you have a customized game plan to guide all your investing and spending decisions? Most investors can't imagine having such a plan in place. I find it essential for helping investors prioritize and create focus in their lives.
  6. Have you devised a clear-cut method for measuring the success or failure of your investment portfolio? How do you really know that your investments are providing the right return based on the asset categories you are holding? Note: if someone else is managing your investments, they may have little incentive to provide you with such a system.
  7. Do you know how to measure diversification in your portfolio? Do you know how the different investments in your portfolio move with and against each other? If you don't you may find them all moving down together during the next market downturn.
  8. Do you have a system to measure portfolio volatility? Can you measure the risk of your portfolio? This is important, because you can't control something you can't measure.
  9. Do you consistently match market returns? The vast majority of investors don't.
  10. Do you know how much you could lose historically over a two or three year market crash?
  11. Do you know the historic rate of return after inflation for the mix of assets you now possess?
  12. Do you have an investment policy statement? This is mandatory for qualified pension plans. If it is good for them, it is also good for you.
  13. Have you measured the total amount of commissions and costs in your portfolio? Even "fee-only" accounts contain trading costs and management expenses that aren't necessarily visible to the investor. Do you know what those expenses are?
  14. Do you know the three warning signs that you or your advisor are gambling and speculating with your money versus prudently investing it?
  15. Do you know where you fall on the Markowitz Efficient Frontier? Markowitz found a way to evaluate the risk and expected returns of various portfolio mixes. With this knowledge, investors and their advisors can create portfolios with a maximum expected return for the level of risk they are willing to take.
  16. Have you established a written agreement that outlines expectations for your relationship with your financial advisor?
  17. Are you working with a financial coach versus a financial planner? A coach will help you answer these questions and help solve the chronic problems that the majority of advisors create.

These questions concentrate on what is at the heart of investing: be able to use money to realize dreams and achieve life long goals. This quiz has been carefully crafted to assist investors in exploring the concepts and philosophies that are most fundamental to lifelong confidence about their own wealth accumulation.

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