This is the first in a two-part series on reviewing your mutual fund investments.

Do you really know what kind of investor you are?

In July, redemptions from US mutual funds are expected to reach an all-time high of $50 billion, according to Trim Tabs funds flow research, suggesting that many investors have decided that the recent plunge in the stocks markets is too much to bear.

How have you done with your mutual funds? Where are they positioned in terms of market value? Should you sell, hold, or buy?

First, you need to know what kind of investor you are. Oh, for goodness sake, you think, I already to know that, I am the one that decided to invest in the first place. Ah, but you see, I know that you can be two people, one who is incredibly aggressive when markets are rising - as in 'I want at least a 40 percent return annually.' And, one who is miserable, absolutely miserable when markets fall, who cannot bear watching values fall and will ultimately succumb to emotion and cash out, generally, just at the wrong time.

We are assuming that:

a) You initially purchased good quality mutual funds from good quality mutual fund companies that were listed on a stock exchange, thus subject to some regulation;

b) You purchased these funds through a reputable investment firm;

c) You felt, and still feel comfortable working with your financial advisor;

d) You were not an Internet or technology sector speculative investor; or if you were, you have already sold those funds;

e) That reviewing investments means within the context of all of your portfolio, including savings, pensions, home purchase, education funding, cash value of life insurance, etc.

Prior to and even during the investing process, which should e be a life-long event, investments should always be selected that are suitable for your financial risk profile. This profile actually changes over time, just as life does not ever proceed in a straight line.

The questionnaire below is a sample of an investor financial profile test. Caution: this test is not to be considered a complete and absolute guide to how you should be invested.

You may have taken one of these before.

Your financial advisor may have asked you to sign off on one, prior to providing you with investment choices. If he/she did not give you one, take this one anyway.

In order to determine what you should own, you need to know who you are, where you are in your financial life, and how you feel about money. No pretending here, be honest.

INVESTOR FINANCIAL PROFILE TEST

Choose one out of the three answers for each question that seems best for you at this time.

Circle your score at the right. Add up your score, and see the Code Breaker at the bottom.

What Age Bracket are you in?

55 - 70 1

40 - 55 2

20 - 35 3

What does (did this) sum of money to invest represent to you?

It is all I have saved. 1

I have enough other savings for half a year's living expenses. 2

This is only one-third of my total savings 3

When do you need this money?

I will need the money in three years. 1

Not for 6 - 10 years. 2

Not for at least 10-15 years. 3

How secure do you think your job is?

I don't know, the boss looks worried all the time. 1

Things are OK, but I'm looking for something else. 2

Things are great, just got a promotion. Company making money. 3

How good is your health?

I don't feel well a lot of the time, and I get depressed. 1

I'm OK, but I could be better. 2

I'm in very good shape, and have a good mental attitude. 3

How much debt are you carrying (credit cards, mortgages), etc.?

After paying bills, barely have enough left over for living. 1

Not many bills, but not much cash either 2

I pay my bills and have surplus left over, usually 3

If your mutal fund lost 30 percent, how long could you stand this loss?

Not more than a few week, a couple of months at the most 1

A few months to a year 2

More than a year 3

If it lost 20 percent, but had a good track record, would you ...

Sell immediately, in spite of a deferred sales charge. 1

Watch it for a while and be sure that you have a diversified portfolio 2

Buy more, it's cheap and it has performed well. 3

Score Total: ...

Scoring:

8-12 If you score 8-12, you have a lot of issues to work through before you put money into the investment market. You also may be a very conservative investor.

13-18 you are fairly well situated, you may be a beginning moderate or young investor, starting to put money away.

19-24 You may be an aggressive investor, or a more knowledgeable one, but you do have other resources and contingencies to fall back on, if the market goes south.

The sample questions asked may seem odd, or even too personal. From a personal perspective, while investors want to act rationally, in reality, they react on emotion, fear, greed, and irrational exuberance.

In many cases, none of their investment decisions are grounded in researched fact and logic.

Homework: To use the investment review criteria in next week's column, you will need the following: the mutual fund trading symbol, the most recent mutual fund prospectus, and the mutual fund company's most recent annual report (or semi-annual). If you cannot find them, ask your financial advisor to get them for you.

Insist on getting the trading symbol, you need to know how to track your investments. Watch out for Fund of Funds mutual funds. They usually have a basket of underlying funds bundled together - in those cases, get ALL of the trading symbols of the underlying funds. Numbers: That's what we will be looking at next week, mutual fund performance numbers.

@EDITRULE:

Martha Harris Myron CPA CFP(tm) is a Bermudian, a Certified Financial Planner practitioner and vice president-personal investments at the Bank of Bermuda. She holds a NASD Series 7 licence, is a former US tax practitioner. Send confidential e-mails to marthamyronnorthrock.bm

The article expresses the opinion of the author alone, and not necessarily that of Bank of Bermuda.