Risk Aversion and Investment Alternatives

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Understanding Financial Tolerance in the New Era

[By Dr. David E. Marcinko MBA and Staff Reporters]

Some physicians and financial planners prefer to use a specific approach in determining these difficult-to-determine areas, in lieu of one of several psychological tests that are currently available.

Examples of this specific approach follow.

Investment Temperament

Which statement best describes your investment temperament? Please indicate by ranking the items below from 1 to 4, with 1 being the most descriptive and 4 being the least descriptive. Also, please indicate the extent of your risk aversion by indicating what percentage of your assets you would feel comfortable investing in each category (for example, 50% in the first category, 25% in the second, etc.).


Numerical   Percentage  
ranking   allocation  
* I prefer only the safest of investments.
* I am interested only in “blue-chip” investments.
* An occasional risk is worth the effort for above-average potential reward.
* I’m willing to put everything on the line if the potential reward is large enough.

Listed below are various forms of investments. Please indicate your familiarity with each.

Description High   Low
Certificates of deposit 5 4 3 2 1
Treasury bills 5 4 3 2 1
Other short-term fixed income 5 4 3 2 1
Stocks 5 4 3 2 1
U.S. government bonds 5 4 3 2 1
Corporate bonds 5 4 3 2 1
Municipal bonds 5 4 3 2 1
Mutual funds 5 4 3 2 1
Real estate—direct ownership 5 4 3 2 1
Real estate—limited partnerships 5 4 3 2 1
Oil and gas 5 4 3 2 1
Collectibles 5 4 3 2 1
Precious metals 5 4 3 2 1
Insurance products 5 4 3 2 1


Any other thoughts on behavioral finance topics, like this?


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Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™8Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

4 Responses

  1. The next decade will be full of risk adverse doctors, laymen and FAs. And, some sanity will return to the capital markets … but beware inflationary trends.



  2. Nice blog, and nice post too. I appreciate all the information on this blog, and am a subscriber … cheers!


  3. This is a good blog, and a timely subject

    The past two years have served as a “stress test” to evaluate investors’ true tolerance for risk. Those investors who bailed out on their investment plan and sold equities around March of 2009 should invest in a more conservative portfolio.

    Brian J. Knabe MD CMP™


  4. SEC Approves Crowdfunding Plan As White Advances Jobs Act

    Start-ups and small businesses could sell ownership stakes in their companies by soliciting investors over the Internet under a proposal advanced by the Securities and Exchange Commission.


    But, is this really an alternative investment [AI]?



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