Investor Quiz

Must Answer Questions for Confident Investing

These questions are based on my firm belief that confidence and peace of mind around investing must be created between your two ears. In other words, confusion, stress and anxiety are the result when we are "in the dark" about important investment issues. Note: When answering these questions, you must be 100% confident that you know the answer to the question to qualify for a "yes" answer on the quiz.

1. Have you discovered your true purpose for money, that which is more important that money itself? (Money for money’s sake is not the end game. Money is a tool that delivers something of value to you. In this case we’re referring to your sacred values, whatever they may be. Your True Purpose for Money is the foundation for which spending and investing decisions are made, and the first step towards true peace of mind).

Yes

2. Are you invested in the market? (We'll start with an easy one. Investing in the market, historically, has been one of the best ways to protect investors from inflation risk.)

Yes

3. Do you know how markets work? (Do you understand the underlying dynamics of the market? If not, that is a recipe for a lot of stress and bad feelings when you own stocks and markets don't perform as you expect.)

Yes

4. 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?)

Yes

5. Do you have a system to measure portfolio volatility (an academic measure of risk)? (This is important, because you can't control something you can't measure. While many “experts” talk about risk they seldom provide an a way to measure it.)

Yes

6. Do you consistently achieve market returns? (The vast majority of investors don't.)

Yes

7. Have you measured the total amount of commissions and trading costs in your portfolio? (Even "fee-only" and “no-load” accounts contain trading costs and management expenses that aren't necessarily visible to the investor. Do you know what your true expenses are?)

Yes

8. 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.)

Yes

9. When it comes to building your investment portfolio do you (or your advisor) know exactly what you are doing and why (or what your advisor is doing and why)? (Investing can be confusing and most investors simply throw their hands up in disgust and frustration from trying to comprehend it all. It doesn’t have to be that way.)

Yes

10. Can you identify cultural and media messages, as well as personal mindsets that destroy your peace of mind? (Money can be a corrosive burden or a great blessing based on your mindset, and the messages you allow to bias you.)

Yes

11. 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.)

Yes

12. 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. )

Yes

13. 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.)

Yes

14. Do you know how much you could lose historically over a two or three year market crash? (and have you considered if you can emotionally handle it)

Yes

15. Do you know the historic rate of return after inflation for the mix of assets you now possess? (We like to call this the real rate return since it’s the amount your purchasing power really increased.)

Yes

16. Do you know the three warning signs that you or your advisor are gambling and speculating with your money versus prudently investing it?

Yes

17. Are you working with a financial coach versus a financial planner? (Hint: If you haven’t answered 50% yes then you’re not working with a coach.)

Yes