Many investors have issues with risk – either they want to take on too much of it, or they want to shy away from it entirely. Either scenario is bad news for your financial future, and it’s very important to learn to manage the idea and the reality of risk in your investments. Taking on too much risk can erase all of the gains in your portfolio in one quick downturn of the market. Just ask the many investors riding the upswing of the market back in 2000. Practically overnight they were dead in the water, left wondering what had happened. Chances are good that any time the market is experiencing unprecedented gains in new (or established) areas, there will be a regulatory ‘swinging of the pendulum’ to correct for the excess. Knowing when to participate in an upswing and when to bail out is the holy grail of the day trader’s life, and not something I would recommend most investors to attempt.On the other hand, refusing to take on any risk will allow inflation to consume any gains, eat into your principal, and thereby lower your overall purchasing power. No one will get ahead without allowing risk into their portfolio – think of the elderly person who will only buy cd’s or invest in money market accounts. Most of these individuals have their savings mapped out to support them for the rest of their lives and don’t really care about growth. While this low-to-no risk strategy might work for a handful of investors, for most of us it’s the equivalent of financial suicide – we need risk to outpace inflation and to grow our portfolios. Finding the middle ground when it comes to risk should be the goal of every investor. Try to learn the different ratings of stocks and mutual funds, and don’t forget to include some fixed income investments to round out the overall mix.