Wall Street's '86 roller coaster: a thrill or a chill for you?

If investors don't know how much risk they can take, this has been the year to find out. Taking risks is part of the investment game, but 1986 has been especially tough on people prone to having short fingernails and white knuckles. Last week, for example, after more disclosures about the Ivan Boesky insider-trading case, the Dow Jones industrial average lost more than 43 points in one day, only to regain more than 34 points two days later. That 43-point slide was one of the 10 biggest declines in the history of the Dow. In fact, eight of the 10 have occurred this year, led by the 86.61-point dive on Sept. 11.

Clearly, this is a time to find out how much risk you are comfortable with and how you want to spread your money among various levels of risk.

``We've had a very volatile year,'' says Elwynn J. Miller, a financial planner in Boston. ``If people are able to stand something like this, they can tolerate risk pretty well.'' Mr. Miller can fairly easily gauge which of his clients can tolerate risk: If they didn't call him during one of those big falls in the stock market, they're probably more comfortable with the risk, he notes.

Or, he says, you might ask yourself how you'd react if you put $10,000 in the stock market and, thanks to some event like the Boesky affair, you lost 10 percent the next day.

When he's helping his clients select investments, Miller adds, it's quite possible to have two clients who are the same age, have about the same amount of income, the same family size, very similar long-range goals, but a very different investment portfolio. The difference is the amount of risk they are comfortable with.

``The ability of each person to accept the vicissitudes of the rises and falls of the securities markets'' is very different, he says. One of the hardest parts of his job, then, is to figure out what people mean when they say they're ``aggressive'' or ``conservative.''

``I'm always amused to hear people say they're aggressive but they don't want to lose any money,'' says Jennifer Brown, editor of Personal Investing, a newsletter published by Fidelity Investments in Boston.

These are the people who need to do some self-examination before taking any risks, before putting their money in anything but savings accounts, certificates of deposit, or Treasury bills. One step in that self-examination is the accompanying test. If you score fairly high, it does not mean all your money should be put in riskier investments; it just means you may be more comfortable with a greater proportion of high-risk investments than someone with a lower score.

It might also help to know what's considered ``high risk,'' compared with ``low risk'' or ``moderate risk'' in the investment world.

Joining savings accounts, CDs, and T-bills in the low-risk category are money market funds, life insurance, and annuities. These provide the best possible return without risking your capital, or initial investment. In inflationary times, many investment advisers say some of these are risky, too, because the buying power of your money doesn't keep up with rising costs.

The moderate-risk level starts with bonds, unit investment trusts, and fixed-income funds. Also on the moderate level are balanced funds, equity income funds, blue chip and utility stocks, growth funds, real estate partnerships, and oil and gas income partnerships.

All of the investments on the moderate level provide varying degrees of risk, in return for increasingly greater opportunities to make (or lose) part of your initial investment.

At the high-risk plateau, you'll find (in increasing order of relative risk) capital appreciation funds, individual stocks other than blue chips or utilities, commodity pools, options, gold, and collectibles. With these, you're banking more on your ability to choose above-average funds, companies, or other more-speculative investments. While the chance of losing all or more of your principal - or more than all of it - is greater, there's also the possibility that some of your investments could beat the averages by a wide margin.

Deciding which levels of risk are right for you, then, involves a lot of self-education about the choices and self-examination. Check your income, your present needs, your goals, and your fingernails.

If you have a question that would make a good subject for this column, please send it to Moneywise, The Christian Science Monitor, One Norway St., Boston, MA 02115. No personal replies can be given by mail or phone. References to investments are not an endorsement or recommendation by this newspaper.