Despite the fact that the stock market, as measured by the S&P 500, appreciates on average by roughly 10%, the younger generations are becoming more and more reticent of investing.

According to a recent BankRate survey, only 23% of Millennials (aged 18-37) believe the stock market is the best place to put their money—as opposed to 38% of their Baby Boomer and Gen X predecessors. Having lived through the Great Recession and seeing what it did to their parents, Millennials prefer the security of cold, hard cash in their hands.

But that’s a misconception… and a mistake that could prove quite costly in the end.

Cash will never grow your money.

And the truth is that investing doesn’t have to be a scary endeavor, nor does it need to be a matter of uneducated gambling. There are ways to mitigate risk and build a safe, high-yield portfolio, in any market.

Here’s what you need to know.

Discover blue-chip art investing

Figuring out your investment goals

In order to design an investment strategy, you need to know what your goals are. Every single investment, no matter the type, comes with its own risk/reward profile. Determining your needs vs. your risk tolerance will, in turn, help you determine the types of investments you should be adding to your portfolio.

For instance, if you’re closer to retirement and need to build up your savings quickly, you might consider investing avenues that reap greater rewards in a shorter time frame. On the other hand, if you’re just starting out and have only a small account to begin with, you might consider conservative investments that may take longer to fully mature, but are more likely to withstand short-term market volatility.

Here are a few factors you’ll want to consider to tailor your portfolio to your needs:

• How close you are to retirement and how much you need to save before then
• Your current and future lifestyle costs
• How important it is for you to be able to easily remove money from the markets
• How much risk you’re willing to take on
• What type of investor you want to be (Do you want to sit back and watch your investments grow from afar, or do you want to actively keep your thumb on the pulse of your portfolio?)

Selecting your ‘safe’ investments

Once you’ve figured out what you want and need out of your portfolio, you can start adding positions.

The most important component of a safe portfolio is diversity. Investing across multiple sectors and various vehicles can help mitigate your overall risk in the instance of a particular market downturn. A hit to the pharmaceutical industry is unlikely to affect the price of oil, for instance (and vice versa).

Below are some of the easiest ways to build a stable, diversified portfolio…

1. Retirement accounts: If you’re invested in a standard retirement account like an IRA or an employer-sponsored 401(k), you’re already on your way to a diversified portfolio. Accounts like these are usually invested in mutual funds, which often consist of a variety of diverse assets that you can buy all at once. By the way, even if you’re invested in an employer-sponsored retirement account, it may be wise to look at adding an individually owned account to your portfolio, as well.
2. Stocks that reward shareholders: After your retirement account, the simplest way to add to your portfolio is by buying a collection of solid stocks. Focus on names that pay dividends, so you can collect a regular paycheck while you’re invested. And look in particular for names to look for are ones that have a history of raising their dividend. You can find these by looking at a top-25 list called the S&P Dividend Aristocrats. Another common way that companies reward shareholders is through stock buybacks. You’ll, of course, want to do your own research on any given company you’re considering, but a company that is buying back shares is one that is confident about the direction it’s going. And no one knows the inner workings of a company better than its own management team.
3. Other investment vehicles: There are a plethora of investment vehicles outside of stocks worth considering. These are known to be among the safest:

• High-yield savings accounts
• Money Market accounts
• Certificates of deposit (CDCs)
• Treasury bonds (or other government-issued securities)
• Bond funds
• Fixed annuities

Construct a portfolio like the ultra-wealthy here

1. Invest across industries: You don’t want to pour all your money into a singular industry. If that industry tanks, it’ll take your portfolio with it. It’s best to make sure your portfolio spans at least five to 10 sectors.
2. Don’t take on risk where you don’t need to: If you have the flexibility in your investing timeline to take on longer-term investments with lower risk profiles, it’s best to do so. Steer clear of companies with unestablished histories, inexperienced management teams, or low credit ratings. Certain sectors and investment vehicles are more prone to risk than others, as well. Some investments that carry more risk are: options, futures, penny stocks, junk bonds, and emerging markets.
3. Look at non-correlated assets: Investments that are not tied to the ups and downs of the public markets are considered what is known as “non-correlated.” They are independent, and as a result tend to whether market ups and downs better than most other assets. Art is a great example of a non-correlated asset, as it is something that appreciates over the long term due to perpetual interest and limited supply. There simply aren’t going to be any more Picassos available. Masterworks makes it easy to get started in art investing, even if you have a small account. Learn more.

Investing doesn’t need to be a matter of gambling. By building a safe portfolio, you can not only build—but protect—your nest egg as you wait for it to hatch.