Investor Quiz

1. 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.)

2. 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 that don't perform as you expect.)

3. 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?)

4. Do you have a system to measure portfolio volatility? (Can you measure the risk of your portfolio? This is important, because you can't control something you can't measure.)

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

6. Have you measured the total amount of commissions and costs in your portfolio?(Even "fee-only" accounts contain trading costs and management expenses that aren't necessarily visible to the investor. Do you know what those expenses are?)

7. 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.)

8. When it comes to building your investment portfolio do you (or your advisor) know exactly what you are doing and why?

9. Do you have a customized game plan to guide all of your investing and spending decisions? (Most investors can't imagine having such a plan in place. I find it essential for helping investors prioritize and create focus in their lives.)

10. 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.)

11. 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.)

12. 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.)

13. Have you discovered your True Purpose For Money, that which is more important than money itself?

14. Have you identified your personal risk tolerance?

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

16. Are you working with a financial coach versus a financial planner? (A coach will help you answer these questions and help solve the chronic problems that the majority of advisors create.)

17. Do you fully understand the implications and applications of diversification in your portfolio?

18. Are you aware of the incentives brokerage firms and the financial community have when selling commission-based products?

19. Can you identify the cultural messages and personal mindsets about money that destroy your peace of mind?

20. Are you ready to shift your personal experience of money and investing from a scarcity mode to an abundance mode?