I came into the investment business through the back door as an actuary and a risk manager. For more than a decade, I worked for several large life insurance companies creating investment products. My team’s dirty secret? We just wanted to clip a smallish profit on the assets, without taking much risk ourselves. If we could do that, and produce a reliable investment result for our clients, we were happy.

That was my job then; in a different sense, it is my job now. My goal as a writer, commentator, and independent money manager is to retain most of the profit potential from personal investing while removing much of the risk.

Nobody can avoid every up and down in the market. What you can do, however, is to ensure that you don’t get crushed when the market rolls over. My own portfolio is a case in point. Over the last seven years, starting in September of 2000, my investment process has yielded an annualized return of 20% a year. I had only one losing year in that time, but it was a doozy. During four months in 2002, my portfolio lost 32% of its value. I was shaken, but I scraped together my spare cash and invested. Over the next 16 months, my portfolio rallied 86%, which I found about as astounding as the 32% loss.

The experience taught me that risk control works. Oddly enough, though, risk control doesn’t get a lot of attention. The most popular books and websites on investing spend nearly all their time focusing on the prospect of big returns; they rush over the matter of how to avoid big losses or how to deal with these losses when they happen. The result? Many people sour on investing because they take risks they don’t intend and lose a lot of money. They conclude that the investment game is rigged against them and they leave investing.

It doesn’t have to be that way. Let me suggest five simple ways you can control your worst tendencies, reduce your risk and become a happier investor.

1. Spread your bets around.

The most basic rule of risk control is to diversify your investments. It is also the most neglected rule.

Most people don’t understand what diversification means. For starters, it means building a buffer against all the stuff you would prefer not to think about—unemployment, sickness, a horrible bear market, etc. Before you start investing, you need three to six months of living expenses set aside in bank deposits, money market funds and short-term bond funds. Having this cushion protects you from having to sell investments in an emergency, which in turn allows you to take risks with your remaining money.

On top of your emergency funds, your portfolio should include a dollop of high quality bonds that mature in anywhere from two to 10 years. For older people, bonds cushion the downside of the total portfolio and ensure that you can’t be devastated by a stock market downturn. For younger people, bonds provide an additional benefit—you can sell them to buy stocks or other investments if the market plunges and you spot tempting bargains. So how much of your portfolio should you devote to bonds? As little as 20% of your portfolio if you’re in your twenties and a risk taker; 50% or more if you’re above 65 or naturally cautious.

Once you’ve got your emergency funds and your bonds stowed away, it’s time for stocks—and, once again, diversification should be your starting point. You don’t want to bet your entire future on a handful of stocks or on one industry or even on a single country. The easiest way to ensure that you’re widely diversified among many different stocks is to invest in a mutual fund or exchange-traded fund that holds scores of individual stocks, representing a multitude of different industries.