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The Financial Risks That Are Keeping Us Up At Night — And How To Deal With Them 

Kathryn Tuggle  |  April 23, 2024

What’s your relationship with financial risk? All investors have a little “skin in the game” — but what’s too much and what’s not enough? 

Is financial risk keeping you up at night — or do you barely even blink when the markets take a tumble? According to The 2023 State of Women survey from HerMoney Media and Principal Financial Group, our relationship with risk is not only complex, but women are split on their perception of it: 12% of women described themselves as risk-averse, 59% believe they are risk-aware, and 30% said they were risk-accepting.  So how should we be thinking about risk in our financial lives — and how can we start approaching it with the appropriate perspective? 

Women And Risk Aversion 

Women have long been more risk-averse than men when it comes to investing — this is because women typically try to figure out what’s going to go wrong before they invest, explains Seema Shah, chief global strategist at Principal Asset Management.  “As humans, we have an inevitable tendency to focus on the negatives, and for women there is that tendency to worry a little bit more,” Shah says. 

This desire to know all the “what ifs” in a scenario isn’t just seen with our stock picks — it’s prevalent in our careers, too. “Women will look at a job and think, ‘Am I really the right person?’ But you don’t see that same kind of thing with men. Men are more likely to think ‘What could possibly go wrong?’ rather than ‘What are the chances of things working out?’” Shah says. 

While some aversion to risk can be protective in many ways, when we let our worries dictate our actions, we increase our chance of missing out on some great opportunities. 

“Women are no different than anyone else in that they don’t like to lose money,” says Tom Rippberger, certified financial planner and managing partner at Financially Fluent Advisors. “But you have to invest — you can’t just have all your money in cash, because, as we’ve seen the last few years with inflation, there’s just as much risk in doing nothing with your money.” 

Speaking of inflation… 

So, What Are We Most Worried About Right Now? 

In addition to our typical financial fears over whether the markets will go up or down, there are a few things weighing heavily on us in 2024: Yes, inflation continues to make everything more expensive, but we also have big question marks around where the economy is headed long-term, and the election means that things are only going to get more “noisy,” likely with negative headlines, explains Trisha Qualy, certified financial planner and managing Partner at Affiliated Advisors in Minneapolis. “Everything feels very extreme right now, which is only stoking our fears,” she says. 

But here’s the thing — the world is always throwing unexpected events at us. “There is no one day where things are completely stable,” Shah says. “We have to be prepared to sit through the unknowns to get to the gains.” Which means if we want to be investors with a healthy attitude towards risk, ignoring all of that noise is all the more important. “Don’t read every single headline,” Shah says.

Especially in an election year, with a volatile global economy, we may be more inclined to decide the level of risk is too great, and decide to stay in cash. But that’s a mistake. “Over the last 100 years or so, through every single presidential term, the S&P 500 has ended higher than it started,” Shah says. “So if at any point you said, ‘I’m frightened of this president,’ you would have missed out on significant gains.” 

Let History Be Your Guide 

Take a look at the last century in the stock market. You’ll see that the S&P 500 has continually climbed up, up, up, through wars, extreme change, and financial crises, Shah says. 

“Investing can seem really confusing, but as you start to understand trends and how financial markets have responded historically, you’ll see the market gets over most rocky patches. Yes, there will be volatility, and that is unsettling, but while the markets will have moments of worry, it does recover.” 

Unfortunately, many novice investors don’t zoom out and look at those last 100 years of market moves — they fixate on one-to-five year time periods, which can often look disconcerting, Rippberger says. “But once you pull out far enough, you’ll see you’re going to be just fine in the markets.” 

How To Invest To Reduce Your Exposure To Risk 

For starters, if you don’t already have a properly diversified portfolio — with investments in different sectors and asset classes — it’s time to get there, Rippberger says. Depending on your time horizon for when you need your money, you can consider a basic bond and equities structure of 50/50, 60/40, or 70/30. “If your time horizon is three years and you’re planning to buy a house with that money, then you don’t want to be taking risks,” he says. “But if you have decades until retirement, you can afford to take a lot more risk.” 

In terms of where to invest, Shah notes that there will always be pockets of stress in the market that are riskier than others — the key is understanding where they are, and trying to avoid them where you can. 

The good news is you don’t need to spend hours studying the economy to see them — just look at how your own behavior has shifted over the last few years, she says. “Working from home is a permanent force of nature, and office space in cities is no longer in as much demand. Similarly with shopping, everyone is buying online, which means shopping centers are in decline, and not likely to make a rebound.” In other words, office and retail commercial real estate is likely a risky investment in the next few years, which you can find simply by looking at the trends that are already part of your everyday life. 

On the flipside, when you’re in search of a promising place to put your money, look at how you’re spending, and the way the world is moving. “We know there is a global drive towards green energy, so eclectic vehicles may do well. And if you’re telling your children they should learn about AI, then that’s a sign that you should consider investing in AI for the long-term,” Shah says. 

“Of course, doing the picking yourself can sometimes be overwhelming as you start to think about the myriad factors that drive a stock price. But there are other options. Buying highly-diversified index funds, low cost ETFs, or target date funds gives you exposure to the broad market, reduces specific company risks and can give you peace of mind. It’s important to find a way to invest that can let you sleep at night.”

How To Know If Your Level Of Risk Is “Right” 

What if you’re not sleeping at night — not because you’re worried about the investments you have, but because you’re worried about those you’re missing out on?  There’s a chance you should be taking more risk.  (One sanity check: Take 110 and subtract your age.  If you don’t have close to that amount in stocks, you may not have enough risk.) “If you have those FOMO moments that start to envelop your thinking, decide what portion of your income you want to dedicate to investing, and step into the market gradually so you can build up that confidence and understanding,” Shah says. 

On the other hand, you may be taking too much risk if you ever find yourself fearful of what would happen if one particular stock or industry tanked. “If the thought of that company going to zero sends you into a panic, then it’s time to diversify [which in and of itself is a way to] start taking less risk,” Rippberger says. 

No matter what your level of risk tolerance is today, research is the key to keeping a healthy perspective on things as you grow as an investor. “Read up on what you’re doing. If you don’t understand it, don’t invest in it,” Rippberger says. 

Continue your research by learning more about investment risk and risk tolerance at

This story was sponsored by Principal Financial Group®

About Principal Financial Group®

Principal Financial Group® is a global financial company focused on improving the wealth and well-being of people and businesses. In business for more than 140 years, Principal® helps customers plan, protect, invest, and retire, while working to support the communities where they do business, and build a diverse, inclusive workforce. Learn more about Principal at


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