America the risk-averse
December 18, 2019 by Emily (Recker) Holbrook
Americans are generally risk-averse and tend to play it safe, especially when it comes to their finances. According to the latest findings from our Planning & Progress Study, three-quarters of Americans (72%) report they are more comfortable reducing risk to ensure the safety and stability of their savings and investments, even if it means the potential for lower returns.
The instinct to protect investments is certainly positive, but it’s also important to understand what may be driving that behavior. Is it based on people’s comfort level with known risks or does it come from uncertainty about the level of risk they’re taking?
This is a nuanced question, but an important distinction. Consider this analogy. My husband and I do a lot of hiking, and every trip we take requires a different set of preparations. Whether we’re going to Cuba, Patagonia, the Wadi Rum Desert or elsewhere, the conditions vary wildly. If we don’t have good insight about the destination, it’s hard to know what to bring and we might default to over-packing.