Are you a risk taker?
If you have investments on Wall Street, you are. You might not be a skydiver, scuba diver, or venture capitalist, but you're a risk taker. Your money is at risk of loss. Investors know that the amount of money they are likely to earn on their investment is directly related to the amount of risk they are willing to accept to generate that return.
What continually amazes me, however, is how misinformed most investors have as to the amount of risk they actually have. I'd say that 75% of the folks I interview who tell me they are "very conservative" when it comes to their tolerance for risk, have no idea that their stockbroker has them heavily invested in high to moderate risk funds!
We know that we need to take some risk. What we don't seem to know is this: we should always take the least amount of risk necessary to generate a required return. In other words, if you can earn 8% a year taking a low risk, why on earth would you want to take a moderate risk to get that same 8%?
In a sane world, you wouldn't. Is your broker living in a sane world?