Understanding yourself is a critical part of investing. It is important that you understand not only your personal view of investing, but also your family view of investing. Start by taking the simple risk-tolerance test, found in Learning Tool 16: Risk-Tolerance Test. The test gives simple recommendations for possible asset-allocation targets (asset-allocation targets will be discussed later). Know how much risk you are willing to take.

Review Learning Tool 21: Key Questions on Money in the Family. What are the major experiences you have had that have influenced your views on money and investing? What were you taught about money and investing when you were growing up? What do you think your parents would say if you asked them what they would have done differently regarding these topics? How are you going to teach you children about these topics?

Review the top of the investment hourglass. Where are you on the top of the hourglass? Are your priorities in order? Do you have adequate health and life insurance? Are you out of consumer and credit card debt? Do you know your goals and your budget, and are you ready to begin writing your investment plan? Determine where you are and determine the steps you must take before you begin investing.