Investment Risk Taking

Investment Strategies for Gay Men

Joshua Kennon, About.com Guide to Investing for Beginners, answers questions gay men have about investing and saving money.

I asked: How can a person calculate their personal level of risk when it comes to investing?

Joshua said: The biggest determinant of risk level should be the amount of time people have to leave their money invested. For those that are ten years or more away from needing the money, they can ignore fluctuations in their index funds as long as they are still dollar cost averaging into their positions by adding regular deposits at fixed intervals. Those that need their money any time in the next few years shouldn’t be in the stock market, period. No exceptions.

Of course, there is a degree of personal psychology. Some people just can’t stand huge fluctuations. In that case, they would be better off investing half of their assets in bonds and half in stocks to help balance the fluctuations. It might result in less wealth in the long run than an all equity (stock) portfolio, but if it’s going to keep them from selling their shares in a panic during a market crash, they will end up happier and better off than they otherwise would have been.

More Investing Questions:
Are bad economic times a good time to invest?
Where should beginning investors start?
What about gay couples looking to invest together?
What's the one thing beginning investors should know before they start investing?
What should gays look out for when investing?
Should gay men invest in companies that discriminate?