Your Risk Profile
After you sign up for 401K GPS and begin to take control of the management of your 401k account, you will be given a nine question risk profile to complete. The goal of the risk profile is to assess two aspects of your risk makeup: your ability to take risk and your willingness to accept risk.
Ability to take risk essentially determines if your situation allows you to take risk and if you’re on track to meet your goals. Factors to consider here include time until your financial goals are needed to be met, retirement funding level, income and savings, debt levels and liquidity needs. Also consider the type of industry you are in and if your income is derived from commissions or a steady salary.
Willingness to take risk depends on your inherent nature and attitudes toward risk. This is an emotional component, and although it should be considered, try not to let it override the more concrete analysis of your financial condition.
Both are needed to provide as complete a picture of your financial situation as possible. This assessment will be the