What should an investor do if they have a low risk tolerance?

For an investor with a low risk tolerance, the most appropriate strategy is to focus on safe investments such as bonds or savings accounts. This approach aligns with their preference for stability and preservation of capital rather than seeking potentially high returns that come with greater risk.

Safe investments like government bonds or high-yield savings accounts tend to carry much lower risk of losing principal. They provide predictable returns, which can help to minimize anxiety about market fluctuations. By concentrating their portfolio on these safer assets, investors can sleep easier at night, knowing they are less exposed to the volatile nature of the stock market.

Investing primarily in high-risk stocks, taking on more risk to compensate for potential shortfalls, or ignoring their risk tolerance entirely would expose the investor to greater uncertainties and potential losses that they are not comfortable handling. Therefore, focusing on safe investments is the best strategy for someone who prioritizes avoiding risk over maximizing returns.