Your tolerance for risk will determine the rate of return used for your retirement projection. To help you evaluate your risk tolerance, answer the question in the next paragraph.
Consider the following hypothetical situation: You invest $10,000 over a time horizon covering a number of years. Which of the following scenarios would you be most comfortable with after three years*?
Value of a $10,000 investment after three years
Scenario A (Low risk tolerance), Scenario B (Moderate risk tolerance), Scenario C (High risk tolerance).
* The estimates mentioned in this question have been chosen to include 95% of historical results and they are based on actual data since 1970. However, there is no guarantee of capital, nor that future fluctuations will not exceed the minimum and maximum thresholds indicated from historical data.