You want to invest, but you don’t.  You would like to have investments, but don’t know where to start.

Could a concern of yours be that you will make a mistake with your investments? Just remember that the only investing mistake you can make is to not do it.  You only hurt yourself and your future by not investing.

Don’t hold back on investing, just learn how to do it stress free.   The following tips should help you learn how to be okay with investing and the roller coaster affect of the market.

Here’s How You Can Invest Worry Free

#1 - Understand Your Own Risk Tolerance

Know Your Risk & Invest Accordingly

• Your tolerance for risk is very important when you are investing.
• There is not right or wrong risk tolerance level.
• Risk tolerance is a personal thing.
• Your risk tolerance depends on your age and the number of years you have to invest until you will need to begin withdrawals, or in other words, your time horizon.
• Risk tolerance depends on how long your investments will have to grow.
• Your tolerance for risk is based on how comfortable you are watching your investments ride the market wave.
• How well do you react when the market goes up and down?
• Do you lose sleep when you watch your investments drop in value due to market conditions?
• If you know your tolerance for risk and market conditions, you have a guideline for your investment choices.
• To invest stress-free, make your investment choices according to your own risk tolerance; don’t try to compete with your neighbor’s level of risk.
• Young investors have a higher tolerance for risk.
• With investing and almost everything else, young people generally have high thresholds for risk and danger.
• Young investors have many years for their investments to rebound from losses so they aren’t as nervous as investors who are planning to retire in a few years.
• Like they say “act your age”…. be sure to “invest like your age”.

#2 – Understand Risk In General

Know The Different Risks & Adjust Accordingly

• There are different types of risk.
• The two risks most investors are usually most concerned about are losses in the value of their portfolio and low rates of return.
• There are a few other risks that help to determine your portfolio growth and value.
• Company risk: this is the risk that the internal struggles or problems that company’s experience will affect the price of their stock, thus your portfolio.
• Market risk: the risk of the entire market dropping in value.
• Inflation risk: this is the risk that your investment returns will be less than the rate of inflation.
• Diversification risk: the risk that your investments are too heavily concentrated in a few market segments and those segments drop in value.
• Knowing that different types of risk that exist should help you become more comfortable in adjusting or avoiding, when possible, that particular risk.

#3 – Understand Diversification

Know How To Diversify & Work It

• The market swings should have less of an impact on a portfolio that is diversified.
• If your investments are spread out, your market risk is reduced.
• A diversified portfolio is a mix of stocks, bonds and a cash equivalent.
• Each of those asset classes behaves differently in the market, so produce different returns for you.
• When stocks are up, bonds are usually down and vice versa; so by investing in both, you offset the risks of the market.

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