First, I’d have to say it’s impressive that they recognize they’re risk averse. Typically, investors fool themselves into believing that he or she can handle more risk until a correction occurs. That’s when they reveal their true colors and then a knee-jerk response usually takes place out of fear. I would advise investors to respect their risk level and don’t try to deviate too much from their true nature.
5 basic tips for the risk-averse:
- Don’t talk about the stock market around the water cooler. Listening to others venting about their investments or giving financial advice will only stir up your nervousness and doubt.
- Get your advice and guidance from a financial planner. They are there to help you navigate the stock market cycles.
- Don’t look at your portfolio daily. You might find once a month or every other month is more comfortable for you. Checking performance on a daily basis will only cause more anxiety and prevent clear thinking.
- Maintain your equity investments with a time horizon of at least seven years. If you can’t handle that duration, stay in fixed income or cash.
- Continuously educate yourself by reading the newspaper finance section, but don’t overdo it by having the business news in the background 24-7.