Even though people know it’s important to invest, many people put it off for one simple reason: stress.
The risk of investments is often enough to scare people into inaction or, at the very least, taking the wrong actions.
It doesn’t have to be this way, though. Learn to lower your investment risk and you’ll have no problem funding your future.
The first thing you should do to manage your exposure to investment risk is put together a budget. One big reason people are stressed out by the idea of buying stocks or investing in other common ways is simply because they don’t have a plan for their money. For them, investing means potentially putting other financial obligations at risk.
Investing shouldn’t be treated as something you’ll “get to” when circumstances allow. Investments are as important as anything else you spend money on. Allocate funds for them in your budget the same way you would your mortgage or rent, utilities, groceries, etc., and you’ll find that risk becomes less of an issue because the rest of your spending is adjusted accordingly.
Understand What Your Specific Goals Are
You can lower the risk of investments substantially if you get clear about your ultimate goal. We’ll touch on this in a bit more detail in the next section, but the point is that you may be exposing yourself to risks that are unnecessary simply because you’re aiming for general, vague, or unsuitable goals that are also unnecessary.
Don’t invest simply because that’s what you’re “supposed” to do. Invest with purpose so you’re only tolerating the risks you absolutely must.
Understand What Kind of Risk You Can Tolerate
There will never be zero risk when it comes to investing. If you want zero risk, save your money. If you want to grow it, you’ll need to put up with some degree of risk.
The amount you can tolerate will largely depend on two things:
- Your financial goals
- Your age
For most people, the ultimate goal of investing is to fund their retirements.
However, no matter what your unique goals are, your age will affect what kind of risk you should tolerate.
Generally speaking, when you’re younger, you can take on more risk. That’s because if you make an investment that falls through, you still have plenty of time to recover before you reach retirement.
Seek Help from a Professional to Manage Your Investment Risk
Finally, risk and investments may be inseparable, but that doesn’t mean you don’t have options. Hire a financial planner and let them handle your investments for you. Both your portfolio and stress levels will improve.
If you’re worried about the risk of investments or simply want more peace of mind, contact Mooney Lyons today. We’d love to hear about your goals and make sure you reach them with minimal anxiety.
The opinions voiced in this material are for general information only an dare not intended to provide specific advice ore recommendations for any individual. Investing involves risk including loss of principa. No strategy assures success or protects against loss.