Top 5 Signs You're Too Risk-Averse - SmartAsset.com

We all know that a safe approach to personal finance falls somewhere between the two extremes of betting your paycheck on a card game and putting all your money under the mattress. Exactly where you place yourself on the spectrum of risk tolerance is a personal choice, but one that can have a big impact on your net worth. How to tell the difference between a healthy amount of financial caution and a risk-aversion that’s holding you back? That’s a tough one. Read on for our top 5 signs you’re too risk-averse.

Find out now: How should I save for retirement?

You may be too risk-averse if…

1. Your retirement portfolio is growing at a snail’s pace

We get it. The stock market can be a scary place. When you put money in stocks, you have what’s called “equity exposure.” The “exposure” means exposure to risk, to ups and downs in the market. Just remember that the younger you are, the more risk you can afford, since you’ll have more time to make up any losses before retirement.

The old saying “nothing ventured, nothing gained” holds true when it comes to investing. If you’re still far from retirement and your investment strategy favors safety over growth, your risk-aversion may be holding you back.

2. You’re over-insured

Life insurance is a great way to hedge against the risk of your death. But if you have no dependents and no co-signors on any of your loans, you might not need much (if any) life insurance at all. And if your spouse works and your kids are grown, you’re probably clear to get out of those life insurance premiums. When you pay too much for life insurance, your aversion to risk costs you money that could be put to work in an investment portfolio.

Find out now: How much life insurance do I need?

3. Your career is stagnant

If your career has plateaued, it may be time to take a risk and start getting your resume out there. Looking for a job, whether in the same field or a new one, is nobody’s favorite way to spend time, but it can pay off in the form of a higher salary and more job satisfaction.

4. You’re afraid to go back to school

Like changing jobs, going back to school can be a healthy form of risk-taking, one that helps you get ahead. If you can find an affordable way to boost your credentials, you’re likely to see returns on that investment.

Find out now: Should I go to school?

5. You wouldn’t move for a job

Mobility is more of an asset than you think. If you’re looking for work in your area and not finding anything, consider risking a move to a new city, one with more opportunities in your field.

When it comes to your finances, there are good reasons to fear excess risk. If you recognize yourself in these 5 signs, though, you might be leaning too much in the other direction and suffering from an overabundance of caution.