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Investing Unit 2: Investment Preferences
Last Updated: November 13, 2008
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What are Your Investment Preferences?
Consider each pair of words below as a continuum. Place an "x" on each line of the continuum to indicate how important each of these features is to you. Marking the middle of a line would therefore mean that the features were of equal importance.
| Low risk (Safety) | _____|_____ | High risk |
| Low rate of return | _____|_____ | High rate of return |
| Low capital growth | _____|_____ | High capital growth |
| High capital preservation | _____|_____ | Low capital preservation |
| Not very liquid | _____|_____ | Highly liquid |
| Shortterm maturity | _____|_____ | Longterm maturity |
| Taxable | _____|_____ | Taxexempt |
| No minimum investment | _____|_____ | High minimum investment |
| Low costs and fees | _____|_____ | High costs and fees |
| Little or no management required | _____|_____ | Much management required |
| Present income | _____|_____ | Capital growth |
| Conservative | _____|_____ | Aggressive |
Figure 5. What are Your Investment Preferences?
Adapted from: Hogarth, Jeanne and Swanson, Josephine (1987). TOPICs, Investment basics, Cornell University, 1987.
The exercise above can be downloaded:
If others are sharing investment responsibility with you, ask them to complete it as well.
- Review your responses carefully.
- Check for inconsistencies in the preferences you have indicated. (For example, do you prefer things that are unlikely to come together, e.g., low risk and high return?)
- Work to understand and resolve inconsistencies and differences in order to assure that your overall investment strategies and asset allocation are consistent with both your needs and your preferences.
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