How Americans Really Feel About Financial Risk-Taking

finger pointing at pie chart on tablet

By Nancy Mann Jackson

You may be quick to try a new food or the latest thrill ride, but when it comes to taking risks with your finances ... ?

If you're like most Americans, you're playing it safe—maybe even too safe.

Almost three-quarters of investors would rather avoid or mitigate risk than manage it, according to a new Ameriprise study.

It highlights four investing personalities: risk avoiders (31%), risk mitigators (42%), risk managers (25%) and risk embracers (3%).

Young investors might seem more likely to embrace risk, but age didn't turn out to be a factor. The general hesitation to take financial gambles was consistent among Millennials, Gen Xers and boomers alike.

"Given the recent market volatility, it's not hard to see why some people are cautious," notes Marcy Keckler, Certified Financial Planner™ and VP of Advice Strategy & Programs for Ameriprise, in the report. "The key is to arm yourself with knowledge to help you make informed decisions."

Here are some lessons to consider from the survey's results.

On creating a strategic plan ... Among risk avoiders, 73% lack financial plans. So it seems like no coincidence that only 24% of this group feel confident about their nest eggs. Formalizing a financial plan can help you get on track for retirement and other goals—which may make you more confident about taking calculated risks.

On seeing the bigger, unclouded picture ... Risk mitigators focus specifically on investments with a guaranteed return. And 64% regret losing money in the stock market more than missing out on potential gains. Keckler describes this approach as "triggered by doubt." It's an example of how emotions can negatively impact your money moves—one of six common portfolio mistakes.

On playing an active role in money management ... Risk managers tend to see risk as opportunity, and 67% take the time to research their decisions. They pay attention to how their 401(k) is invested and its rate of returns.

On knowing the wrong kind of risk ... The fraction of investors who identify as risk embracers also turn out to be less likely to weigh their financial opportunities than risk managers or mitigators. They're the segment least likely to have a diversified portfolio—and 16% are inclined to overpay for a house.

To better understand what amount of risk is right for you, consider consulting with a financial planner.