7 Steps To Stock Investing Without Too Much Risk

Millennials are more likely than other generations to be risk-averse.

They hold 52% of their savings in cash and only 28% in stocks, according to a UBS study. For other generations, the weightings are nearly the reverse: 23% in cash and 46% in stocks.

2013 Accenture report found that 43% of Millennials identify as conservative investors, whereas just 27% of Gen Xers and 31% of Boomers do.

And 43% said they would never be comfortable investing in the stock market, in a MFS Investment Management study.

But investing conservatively — or investing very little and holding your money in cash — runs counter to conventional investment advice for the young, which says, invest aggressively now, while your long time horizon will allow you to recover from any losses, so you can reap the compounding benefits of growth.

If you’re a gun-shy Millennial investor or a risk-averse investor of any age, here’s how to try out stock investing without getting burned.

1. Learn about the various types of investments.

If you’re absolutely brand-new to investing, get the lay of the land first. Read some basic books (here’s a good list), join an Investing 101-type Meetup group, and do some research, such as on the Bogleheads forum, for do-it-yourself investors.

“Know: what is a stock, what is a bond, what is an investment allocation, what’s a mutual fund, what’s an ETF,” says PJ Wallin, a certified financial planner with Richmond-based Atlas Financial. “Kind of like Warren Buffett said with derivatives, ‘If it’s too hard to understand, maybe I shouldn’t invest in it.’”

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