explaination of a questionaire

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Investor Profile Questionnaire | Page 1 of 4

Investor Profile Questionnaire

Schwab model portfolios provide a simplified approach to creating an asset allocation plan. This

questionnaire will help you decide whether one of these portfolios is right for you.

Important considerations when choosing your portfolio

YOuR TIME HORIzON

When will you begin withdrawing your money from your

account, and at what rate? If that date is many years

away, you may be comfortable with a portfolio that carries

a greater potential for appreciation and higher level of risk.

There’s more time to weather the inevitable ups and downs

of the market.

YOuR RISK TOLERANCE

How do you feel about risk? Some investments fluctuate

more dramatically in value than others but may have

the potential for higher returns. It’s important that you

select investments that fit within your level of tolerance

for this risk.

How to make your choice

1. Complete the questionnaire.

Answer the questions on the following pages and use

your score to identify an Investor Profile that’s closest

to your own.

2. Select an investment strategy.

With your Investor Profile in mind, look on page 4 to

find the investment strategy that may be most

appropriate for you.

Circle the number of points for each of your answers and note the total for each section.

SECTION 1: TIME HORIzON

1. I plan to begin withdrawing money from my investments in:

Less than 3 years 1

3–5 years 3

6–10 years 7

11 years or more 10

2. Once I begin withdrawing funds from my investments, I plan to spend all of the funds in:

Less than 2 years 0

2–5 years 1

6–10 years 4

11 years or more 8

Subtotal: Time Horizon Score

Enter the total points from questions 1 and 2.

Time Horizon Score: _______ point(s)

If your Time Horizon Score is less than 3, stop here.

A score of less than 3 indicates a very short investment

time horizon. For such a short time horizon, a relatively

low-risk portfolio of 40% short-term (average maturity of

five years or less) bonds or bond funds and 60% cash is

suggested, as stock investments may be significantly more

volatile in the short term.

If your score is 3 or more, please continue to Section 2.

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Investor Profile Questionnaire | Page 2 of 4

SECTION 2: RISK TOLERANCE

3. I would describe my knowledge of investments as:

None 0

Limited 2

Good 4

Extensive 6

4. When I invest my money, I am:

Most concerned about my investment losing value 0

Equally concerned about my investment losing

or gaining value 4

Most concerned about my investment gaining value 8

5. Select the investments you currently own or have owned in the past with the highest number of points.

Money market funds or cash investments 0

Bonds and/or bond funds 3

Stocks and/or stock funds 6

International securities and/or international funds 8

Example: You now own stock funds. In the past, you’ve

purchased international securities. Your point score

would be 8.

6. Consider this scenario:

Imagine that in the past three months, the overall stock

market lost 25% of its value. An individual stock

investment you own also lost 25% of its value. What

would you do?

Sell all of my shares 0

Sell some of my shares 2

Do nothing 5

Buy more shares 8

7. Review the chart below.

We’ve outlined the most likely best- and worst-case annual

returns of five hypothetical investment plans. Which range

of possible outcomes is most acceptable to you?

The figures are hypothetical and do not represent the

performance of any particular investment.

Best- and Worst-Case Scenarios (1 year)

plan

Average Annual Return Best-Case Worst-Case points

A 7.2% 16.3% –5.6% 0

B 9.0% 25.0% –12.1% 3

C 10.4% 33.6% –18.2% 6

D 11.7% 42.8% –24.0% 8

E 12.5% 50.0% –28.2% 10

Subtotal: Risk Tolerance Score

Enter the total points for questions 3 through 7.

Risk Tolerance Score: _______ points

Investor Profile Questionnaire | Page 3 of 4

Determine your Investor profile

The chart below uses the subtotals you calculated in the

preceding two sections.

To determine your Investor Profile, find your Time Horizon

Score along the left side and your Risk Tolerance Score

across the top. Locate their intersection point, situated in

the area that corresponds to your Investor Profile. On the

next page, select the investment strategy that corresponds

to your Investor Profile.

14–18 Points

7–9 Points

5 Points

3–4 Points

0–10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40

Risk Tolerance Score

Conservative

Moderately Conservative Moderate Moderately Aggressive

Aggressive10–12 Points

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Investor Profile Questionnaire | Page 4 of 4

Select an investment strategy

These investment strategies show how investors might

allocate their money among investments in various

categories. Keep in mind that it’s important to periodically

review your investment strategy to make sure it continues to

be consistent with your goals. Please note that these

examples are not based on market forecasts, but simply

reflect an established approach to investing—allocating

dollars among different investment categories.

If one of the investment strategies below matches your

Investor Profile, you can use this information to help you

create an asset allocation plan.

CONSERVATIVE ALLOCATION

MODERATELY CONSERVATIVE

MODERATE ALLOCATION

MODERATELY AGGRESSIVE

AGGRESSIVE ALLOCATION

Average Annual Average Annual Average Annual Average Annual Average Annual Return: 8.0% Return: 9.1% Return: 9.6% Return: 9.9% Return: 10.0% Best Year: 22.8% Best Year: 27.0% Best Year: 30.9% Best Year: 34.4% Best Year: 39.9% Worst Year: –4.6% Worst Year: –12.5% Worst Year: –20.9% Worst Year: –29.5% Worst Year: –36.0%

For investors who seek current income and stability, and are less concerned about growth.

For investors who seek current income and stability, with modest potential for increase in the value of their investments.

For long-term investors who don’t need current income and want some growth potential. Likely to entail some fluctuations in value, but presents less volatility than the overall equity market.

For long-term investors who want good growth potential and don’t need current income. Entails a fair amount of volatility, but not as much as a portfolio invested exclusively in equities.

For long-term investors who want high growth potential and don’t need current income. May entail substantial year-to-year volatility in value in exchange for potentially high long-term returns.

15% Large-Cap Equity

0% Small-Cap Equity

5% International Equity

50% Fixed Income

30% Cash Investments

25% Large-Cap Equity

5% Small-Cap Equity

10% International Equity

50% Fixed Income

10% Cash Investments

35% Large-Cap Equity

10% Small-Cap Equity

15% International Equity

35% Fixed Income

5% Cash Investments

45% Large-Cap Equity

15% Small-Cap Equity

20% International Equity

15% Fixed Income

5% Cash Investments

50% Large-Cap Equity

20% Small-Cap Equity

25% International Equity

0% Fixed Income

5% Cash Investments

Investors should carefully consider information contained in the prospectus including investment objectives, risks, charges, and expenses. You can request a prospectus by calling Schwab at 1-800-435-4000. please read the prospectus carefully before investing. Money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. Investing involves risk, including the possible loss of principal.

Brokerage Products: Not FDIC-Insured • No Bank Guarantee • May Lose Value

Source: Schwab Center for Financial Research with data provided by Morningstar, Inc. The return figures for 1970–2012 are the compounded annual average, the minimum and the maximum annual total returns of hypothetical asset allocation plans. The asset allocation plans are weighted averages of the performance of the indices used to represent each asset class in the plans, include reinvestment of dividends and interest, and are rebalanced annually. The indices representing each asset class in the historical asset allocation plans are S&P 500® Index (large-cap equity); CRSP 6–8 Index for the period 1970–1978 and Russell 2000® Index for the period 1979–2012 (small-cap equity); MSCI EAFE® Net of Taxes (international equity); Ibbotson Intermediate-Term Government Bond Index for the period 1970–1975 and Barclays u.S. Aggregate Bond Index for the period 1976–2012 (fixed income); and Ibbotson u.S. 30-day Treasury Bill Index for the period 1970–1977 and Citigroup u.S. 3-month Treasury bills for the period 1978–2012 (cash investments). Indices are unmanaged, do not incur fees or expenses, and cannot be invested in directly. Past performance is no indication of future results.

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