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is your attitude, you should not be in the stock market, and stay only with investing in fixed-income vehicles. However, if you are willing to risk some money in order to make gains, you must be at least moderately risk-averse.

Until recently, I have never identified with the concept of " being able to sleep at night" or " not losing sleep" over investments. Now I understand, because as a prudent investor, one must be able to make safe or less risky choices by being able to sleep at night, without having to worry about our investments. In the advent of the " subprime problem" where investors are becoming nervous, jittery, and even down-right panicky, the concept of "diversifying risk" went out the window along with the bath water because every part of the economy is now affected.

In addition, it is not necessarily true that investing in Mutual Funds lessens our risk in the stock market. Mutual funds may have diversification, but depending on the weighting of investments and choice of companies and stocks, are just as susceptible to risk as any individual stock. Plus, there are other factors which lessen our profits in a mutual fund.

For instance, fund managers command a fee for their services, called the MER. Before buying any mutual fund, one must check the MER to see how high or how low that fee is. Rule of thumb, anything under 1% or 1.5% is considered a good MER.

As well, check the mutual fund to see if it is a " no-load fund, a front-load, or a back-load fund". The first involves paying no extra fees apart from the MER. The second deals with paying either a commission/fee at the start of the investment and the latter deals with paying a percentage of the profits when one cashes out the mutual fund. Still, some funds will involve a "DRIP" program ( direct reinvestment program). If the mutual fund units go up, the profits are put back into the fund as extra units and money. Some funds carry a penalty for early redemption if one cashes in before 30 days, 4 months or even 2 years, so it is important to check out these stipulations before buying a mutual fund.

As a recent strategy to " diversifying risk", I have resorted to focusing more on defensive stocks, or stocks which give out dividends. Earning dividends has been an age-old approach of getting consistent income while waiting for the stock to rise. A dividend can go up or down depending on how well a company is doing, so a gradually rising dividend company is always a good one to check out. Some companies

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