Every month, The Capitalist Next Door will answer questions submitted by our members. If you would like to submit a question to our resident Capitalist, please click here and put “The Capitalist Next Door” in the subject line. ———

I’m nervous about the risks of investing my money in the stock market. Is it possible to build a retirement nest egg with a simple savings plan?

(submitted by Kate in Dallas)

That depends on your definition of simple. Socking away cash in a mattress? That’s inconvenient, uncomfortable and a fire could wipe out your nest egg in minutes. A savings account in a bank is federally guaranteed, so fire isn’t an issue. But most accounts have extremely low interest rates. The mattress and the savings account don’t give your money any room to grow.

But there are ways to limit risk while building your savings.

One study found that most retirees underestimate their own life expectancy. That means chances are there will be more years at the end of your planned nest egg than you might assume. If you are doing the work of saving money for your retirement, you should find a way to let the stockpile grow, so you won’t be caught short. There are a number of options.

You may want to investigate a fixed annuity, which offers you payments on a regular basis – usually monthly – during your retirement years. Life insurance premiums paid are invested in the general assets of the life insurance company, with the company guaranteeing a stream of fixed payment over the life of the annuity. The insurer takes the investment risk.

Mutual funds pool investor resources in stocks, bonds or government securities, depending on the objective of the fund. There are many mutual funds that have an objective of keeping investment risk low.

Whatever savings option you choose, do your due diligence. Think about what your goal is and what you need to get there.

I recently inherited a few pieces of expensive jewelry. Will they be covered under my homeowners insurance ?

(submitted by Becky in Seattle)

Your jewelry is covered by your homeowners insurance, but it may not cover the full value of the items.

Homeowners insurance protects your home and its contents from disaster, theft and vandalism. Though the amount of coverage you have on your home will determine the amount paid out to replace damaged or stolen items within the home, there will undoubtedly be a maximum dollar limit imposed by the policy. Know the terms, and if you have jewelry or other valuable items that exceed that maximum, look into insuring them separately.

Specialized coverage, known as floater insurance, covers the full value of the item and will also give a broader range of protection. Your jewelry is still covered even when you are traveling and leave a necklace in a hotel room, or if you drop a ring down a drain. That is not the case with a standard homeowners policy.

One study showed that 44 percent of Americans have not revisited their homeowners insurance policy in more than a year. Acquiring new items requires updating your home inventory and your policy so that you are covered in case of a disaster.

A Quick Note: Neither AAPFI nor any of its writers are tax or legal advisors. It is suggested that you consult your personal tax or legal advisor before making tax or legal-related investment decisions.