Can one be too conservative in their investing?

Yes and no.

IMO, A person's time horizon should be the main determinant of their risk level for their portfolio. If a young person saving for retirement has the majority of his nest egg in bonds, then most people would say he is too conservative. The reason is that he might not get a good enough return on his investments to reach his financial goals. If the greatest financial risk is running out of money before he dies, then an all-bond portfolio is paradoxically the most risky portfolio possible.

However, it is also up to each person to decide what level of risk exposure they should take. As long as they are educated on the potential risks and retuns of the various asset classes and have a clear understanding of their goals and time horizons, they should then be given the freedom to invest in whatever portfolio they wish.

For example, many people accuse me of being too conservative with my 30% bond and 70% stock retirement portfolio, being age 31. However, I am well educated in the realm of mutual fund investing, am contributing a lot each year, and am using low-cost funds. Therefore, my decision is the correct one for me. It is not up to them to decide what asset allocation is right for Deron Baker. Only Deron Baker can decide that for himself, so long as he is educated on the matter and willing to accept the consequences. Because . .. . . the world don't move to the beat of just one drum. What might be right for you, might not be right for some.

Part of the problem is that "risk" can be defined in different ways. Another problem is that people's "risk tolerance" tends to change with current market conditions. The same people who though they were risk takers in 1999 suddenly turned "conservative" when the market crashed in 2000 - 2003. A bull market has a funny way of making people think they are Warren Buffet. Another problem is that rules-of-thumb don't necessarily apply to all people, since each person has their own unique set of financial circumstances. They are only meant to be starting points. You must tweak your allocation to your own circumstances.

During a bull market, yes. During a bear market, no.

Absolutely if you have all of your money sitting in cash, mmkt, or a CD waiting for the right time to get into the mmkt....this is a mistake, a lot of people try to time the market and probably about 99% of the time they judge wrong. Best bet setup a diversified mix of stocks and bonds and go for the long haul, unless your getting ready to withdrawal money or retiree should you have it in cash.

Yes. There is an "opportunity cost" to being too conservative.

Example. Put all your money in a savings account paying 2% because it's "insured". If you pass up the stock market, which has historically returned 8%, you have "lost" 6% on a missed opportunity.

yeah! if you dont invest anything- then duh! youre being to conservative in investing because youre not doing any!

conservative means safe...and it depends on your age.

if you are young, yoiu need to be in stocks

as you approach your mid 40s then yoiu need to start switching your money into bonds which are safer

by the time you reach retirement, then have all your money in bonds and or money markets

If the price growth / dividends / interest rates are below the rate of inflation . . .
One is tooooo conservative .
The idea of investing is to have Greater real time assets !

If your investments are making less than the value of what you would get if you lent out the money, say 4%, then, yes, you are investing too conservatively.

Yes. If the investor is risk-averse and afraid of investing in risky investments.

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