Over the years, every generation has been able to be safe with their own money and avoid risks as much as possible. But, as the old saying goes, “no risk, no reward.” In fact, even in retirement, smart, well-calculated investment risks are often the main driver of long-term financial success.
Attitude to risk
According to FINRA’s research, most Americans seize the basic investment risk—in comparison, 80% can determine the riskiest option. But even less (only 55%) sees diversity as a risk management strategy. Understanding is greatly improved among people with investment experience, higher income or university degree.
Risk tolerance usually comes with understanding tracking: 46% are satisfied with the average risk, while 24% are above average or at high risk. The most concerned issues include loss of money, inflation and liquidity – although non-investors are particularly risk averse due to concerns about losses and the need to quickly obtain cash.
Avoiding risks – Isn’t that a good thing?
It seems wise to avoid risks, especially your money. But when it comes to investing, playing too safe is actually probably the most risky move for everyone.
One of the biggest pitfalls in financial planning is not market volatility – it avoids risks altogether.
“Let’s talk about a huge risk: the risk of avoiding risks,” said Leon Labrecque, a LJPR-certified financial planner in Troy, Michigan. “I often see clients sitting in cash, paralyzing their fear of the next Great Recession.”
While your investment strategy should reflect your goals and timelines, most financial planners agree that taking a certain level of risk is crucial to keeping your retirement portfolio growing even in uncertain times.
Maintaining investment risk from a perspective: 10 tips for smart investment
Investing always involves a certain degree of risk, but this risk can feel overwhelming when market volatility or headlines are shocking. These 10 tips can help you stay rooted and make thoughtful decisions about the risk of your portfolio.
1. Don’t try the timer market
As of July 2025, the market appears to have rebounded from a sharp decline earlier this year. But new headlines, such as rising tariffs, have turned our market into unpredictable ones.
No one can reliably predict what the market will do next. That’s why the intelligence of focusing on content you can control: your goals, schedules, and plans for you to keep investing in amidst the ups and downs. Developing an investment policy statement (IPS) can help you articulate your strategy and stick to it, even if the market gets bumpy.
And, if another recession hits, here are 10 surprising moves.
2. Remember: No risk, no reward
There is no risk, no reward, and it is the mantra of financial planners, said Rick Kagawa, a Certified Financial Planning® professional and Huntington Beach president of California-based capital resources and insurance.
“Your investment has no risk equals no return,” he said. “If you have no return, you have to make all the money for your goals. This makes it harder and almost impossible to achieve your goals.”
He added that the most common risk-free account is a bank account, noting that there has never been a time when you can make money on this savings car. “The truth is, your money shrinks with inflation and taxes in your bank account,” he said.
You might think that your bank account is still safer than investing in stocks, which could plunge again and ruin your investment. But in most cases, you are wrong.
3. Yes, the market has fallen, but they keep recovering
A short-term market decline is normal. What matters is the long-standing view: historically, the market has been rebounding and has continued to grow over time. Even the financial crisis of 2008 or the pandemic collapse in early 2020 was a serious decline and ultimately gave way to a strong recovery.
A contraction of one or two years can be painful, but it does not define your long-term success. And if we face a true market apocalypse scenario where investments never recover, then money may not matter—our concerns are greater than the returns of the portfolio.
4. You need some risk to stay ahead (or keep up with) inflation
As you work, income usually rises with inflation. But when you retire, you are more likely to rely on savings – if those savings do not grow, inflation can quietly erode your purchasing power.
Overly conservative investments can actually take risks in the long run. To maintain (or grow) your living standards, your investment needs to earn returns that are at least in sync with inflation. Often, some level of market risk is required.
Avoiding all risks may feel safe, but over time, this can mean lagging behind.
Learn more about inflation risks.
5. Don’t be ruled by fear
Fear is a strong emotion, but a bad investment strategy. Making choices based on panic or worst-case scenarios often lead to missed opportunities and long-term regret.
“The huge risk is fear itself,” said consultant Labrak. “History tells us that fear, not market downturns – causes the greatest damage.”
Focus on your goals, not on the headlines. A solid plan will help you get rid of the storm.
6. Taking calculation and balancing risks is key
Investing is not about going all out and hoping to achieve the best results. This is about taking Calculated risks– Someone who is interested, informed and aligned with your schedule and goals.
In the Northwest Co-Program and Progress Study, 21% of respondents said they actively took the risk to pursue higher returns. The key is balance. As CFP® Scot Hanson explains, your investment choices should match when money is needed.
“To achieve long-term goals, consider high-risk, higher options like mutual funds, especially in the Roth IRA,” Hansen said. “But for short-term demand, avoid unnecessary risks. Use cash, CD or short-term government bonds. You won’t make too much money, but you will protect your principal.”
In short: risks are not to be avoided, they are managed wisely.
7. Consider a bucket strategy
A simple bucket strategy divides your savings into different “buckets” based on the money you need. The idea is to take more risks through long-term investments while keeping short-term funds in a safer, more stable account.
For example, in the coming years, you might keep a barrel of cash or CD, another bond for medium-term demand, and a third of stocks that grow long-term. This approach helps you manage risks while giving money room to grow.
Learn more about storage policies.
8. Financial meaningful when not taking risks
Usually, start reducing market risks around 55 years old depending on how long you will retire. Michael Black, a certified financial planner and owner, said that by using a hosting account, avoid high levels of accounts in that account. .
“Once you enter the distribution model, it’s crucial to avoid large-scale market actions,” he said. “When you retire, it’s more important to avoid procrastination than to get the right returns.”
Not surprisingly, baby boomers (51 to 69 years old) are more risky than Gen X (34 to 54 years old) and millennials (18 to 34 years old).
In fact, Northwest Mutual Aid Research found that 83% of baby boomers are more comfortable reducing risks to ensure the safety and stability of their savings, even if this means lower potential for returns.
By comparison, 74% of Xers and 71% of millennials feel the same way.
9. Work with financial advisors
Northwest Mutual Aid Research found that the average risk tolerance for American adults working with consultants was 5.2, while those without consultants had an average risk tolerance of only 4.6.
Trust the experts. They can help you take a sensible attitude towards risk.
10. Understand the power of diversity
Different types of investments have different purposes. For example, stocks are often used to develop wealth over the long term, while lifetime annuities are designed to provide stable, guaranteed income rather than huge returns.
Diversification means spreading your money to various asset types (such as stocks, bonds, cash and revenue-generating products) so that each piece can play a role in achieving your personal goals. This is not just about reducing risks; it is about building a strategy that supports your needs now and in the future.
About Boldin
For those who think clearly about their choices and financial security tomorrow, Boldin is a financial planning platform that enables people to discover, design and manage personalized pathways to a safe future.
Boldin retirement planners are named the best retirement planning tool. The system helps you discover the path to life you want and create plans that suit you and your goals.
Source link
