The WSJ Sunday has a story on various tools that investors can use to measure portfolio risk. I decided to try out RiskGrades to find out how much risk I am taking with our personal portfolios and the Sleepy Portfolio.

RiskGrades assigns a number to each security depending on how risky it is (Cash has a grade of 0, S&P 500 has a grade of 62, RIMM has a grade of 248 etc.) and also calculates how much an asset could lose due to extreme market conditions.

The Sleepy Portfolio has a RiskGrade of 42 and could sustain losses of $911 (0.96%) in an extreme market event. The RiskGrade suggests a Balanced Plan investment strategy, which is what we aimed for.

My retirement account has a RiskGrade of 59, my spouse’s RiskGrade is 69 and our taxable portfolios are graded as 84. My retirement portfolio is graded as Balanced and the others are called Growth. My aim is to introduce bonds into the retirement accounts and reduce risk even further.