This positive mindset is generally suited to long-term investing. The best market days have often come on the heels of downturns.¹ And while stocks are more susceptible than bonds and cash to short-term volatility, over the long term they historically have tended to offer significantly higher returns.² Still, don’t assume that you should hold onto every investment, no matter what. Investors who will happily sell appreciated stocks for a gain often hold onto declining ones too long, for fear of realizing a loss.

One possible approach: To become more comfortable with regularly weeding unproductive assets from your portfolio, you might consider a strategy such as tax-loss harvesting, which involves selling some investments at a loss to offset capital gains taxes on others. For more insights, read: “6 reasons to sell an investment – and 2 to hold on.”

Whether it’s physical exercise or investing, targets can help you measure your progress towards goals. But they have their limits. For risk-averse investors, falling below a target, even temporarily, could prompt hasty decisions and lead to selling at a loss or missing out when the market rebounds. A risk-appropriate portfolio could help you stick with your strategy. It may also help to keep in mind that volatility is a normal part of investing, and stocks remain essential to pursuing the long-term growth you need.

One approach to consider: Replace arbitrary thresholds with ones based on your actual financial situation, taking into account your time horizon and whether you have sufficient cash in other accounts to cover spending needs and emergencies. (See “capacity” questions 3 and 4.)

You may be willing to accept a higher level of risk to achieve your goals. However, “risk-tolerant” and “risk-averse” aren’t absolute terms; they’re two ends of a spectrum. Most of us fall in the middle of that spectrum. What’s more, aversion to losses often rises with the dollar amounts involved. What if, instead of $20 versus $100 or nothing, the choice was $2 million versus $10 million or nothing? Potentially losing out on $2 million might make you more likely to pass on the coin toss.

Consider this: In an investment setting, suddenly realizing you’re not as risk tolerant as you thought could lead you to make hasty decisions. Your advisor can help you better understand your feelings about risk under various scenarios and conditions.

It’s human nature to feel the pain of losses more intensely than the happiness of gains. For those with a strong aversion to risk, understanding your emotions could help you find an investing approach you’re comfortable with.

One way of managing your fear of investment loss might be to build a more diversified portfolio, balancing your stocks with a higher proportion of bonds offering the potential for steady income, as well as some cash and cash alternatives.

One unexpected risk to watch out for: Be aware of the potential for hidden losses. Interest on a seemingly safe cash portfolio may not keep pace with inflation, let alone provide  you with future growth. In other words, a too-conservative portfolio carries its own risks, so don’t abandon stocks altogether.

Say you’re putting away as much as you can to finance a child’s education, or that your heart is set on retiring at 60, with no intention of working longer. Goals such as these may require a more conservative approach, with a balanced mix of stocks for potential growth and bonds for potential income.

One possible strategy: Remember that becoming too conservative or delaying investing over fears of volatility could impede your goals. An approach such as dollar-cost averaging, which involves investing regular amounts at specific intervals, could help you stay on a steady course toward your important goals.³

Aspirational goals give you greater flexibility when it comes to risk. Say, for example, your basic retirement needs are covered, and the big question is where you’ll live. That beachside town may be a bit of a reach — more affordable choices would be okay, too. Or perhaps you’re investing for a vacation home but if that doesn’t happen, renting a couple of weeks every summer wouldn’t be a disaster.

One strategy to consider: For goals such as these, you might select a more aggressive portfolio with a higher percentage of equities, including allocations to higher-risk, potentially higher-growth investments such as small-cap stocks. But be careful that an aggressive strategy for one goal doesn’t expose your overall strategy to too much risk. An advisor can help you find a comfortable balance.

As “go time” approaches, investing risks become more pronounced. If you’re counting on your portfolio to produce steady income for a long retirement, and you’re an aggressive investor with most of your assets in stocks, a sharp market downturn shortly before you retire could reduce the portfolio’s ability to produce the income you’ll need — a phenomenon known as “sequence of returns risk.”

Consider this approach: Aggressive investors might consider adjusting their asset mix to a higher degree of income-producing bonds as retirement approaches. But avoid becoming too conservative. Remember that for a retirement lasting 20 or 30 years, you’ll need some exposure to stocks to help your portfolio continue to grow.

Generally, you can invest more aggressively for longer-term goals. If retirement is many years away, your portfolio has more time to recover from temporary downturns. Therefore, you may want to take on greater risk, with a higher proportion of stocks for growth than you’d have if your goal was right around the corner.

That said, with a high tolerance for risk you’ll need to be careful not to invest too aggressively or too heavily in illiquid stocks — that is, stocks that might be hard to sell quickly. That’s true especially as you’re approaching the time when you’ll need the money. A balanced, diversified portfolio including a variety of stocks, bonds and cash generally gives you the best chance to meet your short- and long-term needs. Meet regularly with your advisor to discuss any changes that may be in order as you’re nearing your goal.