Problem: After three years of losing money in the stock market, I'm still afraid to invest. But I'm also afraid of staying out and missing any gains. Any ideas?

Strategy: Try convertible securities.

The Financial Planning Association says convertibles are hybrid securities - interest-paying bonds or preferred stock - that can be swapped later for voting shares.

While not all financial planners are enthusiastic about convertibles, many like their diversification value and recommend a 5 percent to 10 percent portfolio allocation.

Still, selecting good convertibles is tricky. And some individual investors have trouble getting access to convertibles. That's why many investors might find it better to invest in convertibles through mutual funds.

A convertible bond pays a fixed coupon rate and has a fixed maturity. The yield is usually higher than the company's common stock dividend, but lower than its nonconvertible bonds.

The preferred stock version usually pays out quarterly a higher fixed dividend, with no maturity. Both can be converted to a predetermined number of shares of common stock.

The bond version normally is considered safer than its preferred version - but both offer stable income, which mitigates some market volatility. Those wanting to sell a convertible, however, may not get a good price because of the small market for them.

Another route with convertibles is to exchange them for common stock and then sell the shares.

If bond prices fall or the stock price shoots up, it can pay off to convert; if the stock tumbles, the interest-paying feature of the convertible tends to blunt the drop.

Readers: Consider Savvy Strategies as general information only. Seek the help of professionals because circumstances might vary.

Planners: Share your tips with Enquirer readers. Send your Savvy Strategies to Amy Higgins, 312 Elm St., Cincinnati, OH 45202 or e-mail ahiggins@enquirer.com.