In preparation for a client meeting, I e-mailed the client and said, “You can be greedy or afraid, but not both.” For a couple of years, this client basically said things like, “I am really worried about what is going to happen in the market; how can we get stock market returns without the risk?”

After a great 2019 in the markets, I suspect that many of you may be experiencing similar thoughts. You can’t get great returns without risk. It is not possible. Fuhgettaboudit. Fear and greed are consistent combatants in a tug-of-war that leaves you emotionally battered and more reactive than necessary. Rather than being ping-ponged with the news or market fluctuations, here is a better approach.

How long do you have?

Most important, understand your time horizon. This is the most critical step when determining how you should be invested. Short time horizons and greed are incompatible.

If you know that you are going to be spending money in the next three years, your only investment should be cash (or paying down debt).

I prefer online savings accounts because they are federally insured and typically offer higher rates than what banks offer. Ten-year Treasury bonds pay less than 2%, so anything that pays you more than that involves risk.

Your time horizon is based on when you need to spend money. For example, the first three years of retirement are a short time horizon and should be in cash. The rest of your money should be in longer time horizon investments. Even if the market stumbles, the three years gives you some recovery time.

Also, you may have multiple time horizons for college savings. Let’s say you own a 529 plan with enough saved to pay for a year of college. If the markets fall, you can use the money in year three or four, hopefully after loss recovery. This means you could stay invested. If you are fortunate enough to have college completely covered by the 529, then you should move to a safe investment in the account and no longer take on risk.

Know how you react

Next, think about your reactions to market movements. Ultimately, you need to understand yourself well enough to know how to eat well or sleep well.

All cash may help you sleep, but it probably won’t leave you with enough money when you ultimately need it. Over long periods of time, owning stocks will help you eat well, but you could have long periods of indigestion.

If you are just starting out in investing, for example with a 401(k), then you should be as fearless as you can because your time horizon is long and volatility is in your favor. This means that the cash that is being invested in your plan every year represents a significant amount of your portfolio and allows you to buy more shares when the markets fall.

Getting the portions right

Once you have invested for a while, it is time to own a variety of investments — U.S. and international stocks and bonds — to mitigate fluctuations. The amount in each category depends on your time horizon, sleep factor and long-term needs.

The more you have in bonds, the lower and more predictable your long-term returns are likely to be. The more you have in stocks, the higher and more variable your returns are likely to be. This is when the fear/greed battle can begin to rear its head.

Just as people often misunderstand time horizon, they also misunderstand risk. We tend to have more confidence in things we are closer to — such as stock in the company at which we work, or, for some bizarre reason, things where people we know have invested and claim success.

This could be everything from investing in Bitcoin to real estate. The problem with these claims is that may be hard to verify, come from a small sample size, or represent luck rather than skill. But this is where greed often takes over because we want what others have. It’s important to settle yourself here.

About those experts ...

The key thing to realize about investing is that no one can tell you what is going to happen over the next several months. While a panel of investing pros can be interesting, their advice isn’t guaranteed.

The other thing to realize about investing is that at some point, most experts (even those who are on completely opposite sides of a position) are eventually right — but that isn’t very useful. Being too early is as expensive as being too late.

Geopolitics eventually affect markets, but not necessarily on a predictable time frame. And in an election year, be careful about your own biases affecting how you view your investing,

When President Barack Obama was elected, many of our conservative clients called to get out of the market because they were afraid that he would be bad for stocks. When President Donald Trump was elected, the same calls came in from liberal clients. The stock market has so far fared well under each of them.

As you look to balance your portfolio in 2020, you may elect to keep both fear and greed out of it.

Ross Levin is the chief executive and founder of Accredited Investors Wealth Management in Edina.