Want To Avoid Risk in Stocks? Here Are Five Tips.

September 5, 2013
by Michelle Perry Higgins

Start Shopping for Long-Term-Care Insurance at 45For investors who can’t stomach much stock-market volatility, what do you recommend?

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:

  1. 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.
  2. Get your advice and guidance from a financial planner. They are there to help you navigate the stock market cycles.
  3. 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.
  4. 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.
  5. Continuously educate yourself by reading the newspaper finance section, but don’t overdo it by having the business news in the background 24-7.