Risk Assessment Calculator

Risk tolerance is how much variability in returns you are willing and able to live with. A high-tolerance investor can watch a portfolio fall 30% without changing course; a low-tolerance investor may sell during the fall and lock in the loss. It is different from risk capacity, your financial ability to absorb a loss, and this calculator scores the two separately so you can see which one is your binding limit.

Risk tolerance is psychological — whether you can hold through a large loss. Risk capacity is financial — whether your balance sheet can survive one without derailing your goals. A long horizon, a large emergency fund, stable income and no near-term cash needs mean high capacity however you feel about market swings; a short horizon, little saving or dependants mean low capacity however calm you are. FINRA Rule 2111 lists them as separate parts of an investor's profile.

Here, with a weighted sum: each of the 10 questions has a weight of 1, 2 or 3 and each answer scores 1 (most risk-averse) to 5 (most risk-seeking). The total runs from 21 to 105, and five bands from Conservative to Aggressive each cover about 17 points. Every weight and option score is shown on the page, so the result is fully traceable.

This calculator uses five bands: Conservative (score 21–37), Moderately conservative (38–54), Moderate (55–71), Moderately aggressive (72–88) and Aggressive (89–105). Conservative profiles prioritise keeping capital; aggressive profiles prioritise long-term growth and accept large short-term falls. Five bands separate the large middle of investors better than a three-way low / medium / high split.

Age affects risk capacity more reliably than tolerance. As you approach the time you will spend the money, the horizon shortens and there is less time to recover from a loss, which lowers capacity; emotional tolerance varies by person at any age. Time horizon is one of the factors FINRA Rule 2111 requires a broker to consider, and this questionnaire captures it in its first two questions, weighted 2 each.

They cover five areas: time horizon (when do you need the money?), reaction to loss (what would you do if the portfolio fell 20%?), income stability, liquidity (do you have an emergency fund?) and concentration (how much of your wealth is this?). FINRA Rule 2111 and Regulation Best Interest require brokers to consider these with your age, tax status, objectives and experience. This calculator asks about all five areas across its 10 questions.

Not a questionnaire as such, but the assessment is. In the U.S., FINRA Rule 2111 (suitability) and, since June 2020, the SEC's Regulation Best Interest require broker-dealers to understand a customer's investment profile, including risk tolerance, before recommending an investment, and registered investment advisers owe a fiduciary duty that includes knowing the client's situation. A questionnaire is the usual way to document that. This page is an educational tool, not a compliance record.

The rule says to subtract your age from 100 to get your percentage in stocks: 70% at age 30, 40% at age 60. Because people now draw on savings for longer, many planners use 110 or 120 minus age, which puts the same 60-year-old at 50–60% stocks. Treat any version as a starting point: it ignores your risk capacity, other income such as a pension, and how you react to losses.

There is no official mapping; as an illustration, a conservative mix might hold about 20–40% stocks, a moderate one 50–70% (the classic 60/40 sits here) and an aggressive one 80–100%. In a year when stocks fall 30% and bonds hold flat, those mixes drop about 6–12%, 15–21% and 24–30% — the practical meaning of each label. Use your profile to pick a range, then let your horizon and withdrawal needs set where inside it you sit.

Only as accurate as your honesty and the market you take it in. A quiz measures stated preferences, and survey research finds stated risk aversion rises after a crash, so the same person can score differently a year apart. The best check is your own record: if you sold during the 2020 or 2022 declines, weight that above any score, and treat a stable result across several attempts as more reliable than one.

No — it is a constraint to plan around, not a flaw. A conservative investor who stays invested usually ends up ahead of an aggressive one who sells at the bottom. The cost is lower expected growth: to reach the same goal in 30 years at 5% a year instead of 8%, you need to save about 70% more each year (annuity factors 66.4 and 113.3). The levers are saving more, a longer horizon, or raising stock exposure in small steps.

Time horizon is how long until you need the money; risk tolerance is how much volatility you can stand along the way. They can point in opposite directions: a 25-year-old saving for retirement has a 40-year horizon, but if a 20% fall would make them stop contributing, tolerance is the tighter limit; a calm risk-taker saving for a house in two years has no time to recover, so horizon wins. The tighter of the two sets the ceiling.