DEFINITION of 'Nervous Nellie'

An investor who isn't comfortable with investing and the risks associated with it. Nervous Nellies have very little risk tolerance. As a result, their investment returns are likely to suffer because they will only invest in very low-risk, low-return investments. Without taking on greater risk, Nervous Nellies may not be able to generate the returns they need to meet goals such as being able to retire.

BREAKING DOWN 'Nervous Nellie'

If a Nervous Nellie decides to take a chance on a higher-risk, higher-return investment like stocks, they will most likely sell the moment the market ticks downward. Investors who sell when their holdings decline in price might miss some bad moments in the market, but they are also likely to miss the upswings.

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