Creating a Discipline Part II

The best way to go about risk tolerance is to look at yourself from the outside in. Take a moment to answer the following questions:

1. What is my age and family status (at what point will I need this money) ?
2. Is the money subject to penalties upon withdrawal ? (IRAs, pensions, annuities, etc.)
3. What are my tax considerations regarding this portfolio ?
4. What is the likelihood that I can replace this money if I lose some or all of it ?
5. What is my experience with investing on my own ?
6. How much time am I willing to put into this process on an ongoing basis ?
7. Do I have access to the tools that I need in order to manage and monitor my investments ?
8. Who else should be involved in the decision-making process ?

When you have these questions answered, utilize them to develop a paragraph or two about your investment goals. This self-assessment statement will help you stay focused and committed to your investment goals. Yes, this means that you should take out a pen and paper and actually write them down.