There are many different ways to invest and the solution you choose will depend on your individual situation: how much you are investing, the degree of access you need to your money and what your financial goals are, both professionally and personally. It’s also important to get clear on the level of risk and return you want to be exposed to.

All investments involve risks. Diversification is a way of managing the risks associated with investing. It involves spreading your money across different asset classes and investments, so as to limit the impact of negative events on any one asset class or investment. Diversifying across asset classes protects you against underperformance in any one asset class. Your asset allocation will reflect how cautious or aggressive your investment strategy is.

Some people find it easy to stay relaxed while their investments rise and fall in value. Others feel nervous if their assets drop in value by even the tiniest amount.

If you’re going to lie awake at night worrying, it’s not likely to be worth the personal cost, no matter how high the returns you might make.

Talking to someone about your ability to cope with financial stress can help you decide how you feel about taking on investment risk, even if it’s just a member of your family or a friend whose opinion you respect.

A professional financial planner should also be able to help guide you through some different options and outline the different levels of risk involved.

No matter what your temperament, exposing your hard-earned savings to any kind of risk will always be a bit scary – especially if you’re doing it for the first time.

Some simple strategies to reduce risk that even the professionals still follow include:

Think long-term: While there are exceptions, fluctuations in the value of your investments should even out over time, so the longer you stay invested, the less investment risk you are exposed to.

Choose the right investment for you: Thinking about your goals, how soon you want to access your money and how likely you are to worry will help you decide which investments are right for you.

Try to avoid putting everything you’ve got into one investment: Spreading your money across different types of investments may protect you from sudden market falls and deliver more consistent returns over time.

Learn how things work: The more you understand about investing and financial markets, the better you’ll become at choosing the right investments for you. You’ll also be less likely to act blindly on a tip you might hear from a family member or friend, without first doing your own research.