Ideally, I would like to see Monte Carlo calculations showing various start and end dates.There are many discussions about this topic on the internet. Several books have been written on the subject.[quote] Wise investing isn't simply about your brain power; you also need a sense of how strong your stomach is -- of how much market turbulence you can take before you sell in a panic. And many of us are fairly clueless about what our tolerance for pain really is. Exhibit A: The $32 billion Americans pulled out of stock mutual funds as the market hit its March low and started a 50% comeback. So how do you arrive at a better sense of what you can handle? Unfortunately, the tool most advisers, mutual fund companies, and 401(k) plans use to judge your comfort with a roller-coaster market -- the so-called risk tolerance questionnaire -- doesn't do a very good job: It's typically too brief to deliver much insight and mixes up separate issues, such as your time horizon, with your appetite for risk. Part of the problem, argues John Grable, a professor of financial planning at Kansas State University, is that advisers view the questionnaire less as a way to measure your daring and more as a way to cover their derrieres in case your investments go bad. ("This form you filled out in 2004 indicates you're an aggressive investor.")Grable is among a small group of academics and financial planners who have worked for years in relative obscurity on building a better risk-o-meter. Now the financial crisis (and resulting volume of angry client e-mail) is raising their profile: 76% of advisers polled by Brinker Capital last November said they needed to reassess how they measure risk tolerance. Whether or not you work with an adviser, the key insights of Grable and others can help you devise a portfolio that can get you to your goals -- and get you a good night's sleep. [quote]You're more conservative than you believeMore at http://money.cnn.com/2009/10/07/pf/risk_tolerance.moneymag/i...
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