If you don’t already have any investments, I want you to make that big step today. If you already have some, but they are small and very low risk, I want you to take a slightly larger risk today. It’s important to take on some bigger risks – not huge ones, but sensible ones – as without risks, we won’t get sufficient returns on our investments.

 

One of the things that keeps us back from investing is thinking it’s too risky, or even worse, that we would rather have no risk at all.

 

This can be an example of a cognitive bias called “zero risk bias”, where we feel we only want to take the opportunity that has zero risks – without recognising that that is just not possible. There is no such thing as zero-risk.

 

But the bias stems from not having a number approach to risk. Instead, many of us have an emotional approach to it. Something feels risky because we know less about it, and so we get a nervous feeling about it in our guts. Is that nervous feeling a 7 or a 9? Who can say?! But we just want it to go away, and so we decide not to take the risk at all. No risk, no emotion – but also no investment.

 

The reality is that risk is part and parcel of investing, and a sensible investment portfolio will have a wide spread of different risks, some small, offering lower returns, some big, having potential for huge returns, some hopefully non-correlated, so they will go up when other things go down. That’s how to manage risk, not by hiding from it and hoping for zero risk.

 

So open your investment account today, and invest in something new. If you’ve not invested in an index before, try that today. Start.