Are You a Risk Averse Investor?


A recent Gallup poll determined that most investors are risk averse and are looking for safety. That is, those people surveyed indicated that they would rather have a safe, secure investment option, even if this results in low growth returns.

64% of those adults (pre-retirement) indicated that they would rather have low growth and have a secure investment. Perhaps not surprisingly, that number is even higher for those people who are in their retirement years. 78% of retirees who were polled indicated that  they too would rather opt for safety, even if it meant minimizing their returns.

While it is understandable that retirees would want to preserve their cash. After all, it’s what they have to live on. But seeing almost tow-thirds of working aged adults opting for security seems higher than one might expect.

Perhaps the rationale behind this is they are still feeling the sting from the financial implosion in 2008 and 2009 when the stock market lost nearly 40% of its value. Or perhaps the people who voted felt that the stock markets may have temporarily topped out and the current bull market has run its course and they are just trying to preserve their gains. Or more likely than either of those two suppositions, perhaps investors have just gotten more conservative in their investing approach of late.

As I suggest in my book, Investing For The Rest Of Us, that most people would be much better off sticking to one plan of action and not changing directions.

The Gallup poll also found that there was little variance by age amongst the non-retirees as to their level of conservatism. Popular belief suggests that people should be more aggressive when they are younger as they have more time to recover from any economic downturns.

While I don’t necessarily adhere to that belief system, I am surprised to see young investors who are as risk averse as the Gallup polls suggests.

What are your views on investing? Would you rather invest in extremely risk adverse investment vehicles, even if it meant giving up considerable upside? How do you invest your money? Do you buy individual stocks? Do you buy mutual funds? Index funds? ETFs? Options?


Add Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.