One of the most common questions I get these days is where to invest in an inflationary environment. Nobody knows how asset prices will react in the short term, but if your time horizon is measured in decades (as most people's are), history shows that equities are the safest place to be. Yes - good old fashioned, volatile, stocks. Don’t believe me? Check out the chart below.

Over a 20 year time horizon, equities have preserved purchasing power 100% of the time - outpacing residential real estate, commodities, gold, and cash.

Counterintuitively, hiding in cash or bank deposits can be more risky than investing in the stock market. As Mellody Hobson, head of Ariel Investments has famously said, “the biggest risk is not taking one.”

But to tell you the truth, this post isn’t entirely just about investing…

Low(er) Risk Rules

When I conceived the book title Low Risk Rules, I thought it was a pretty clever double-meaning. I was worried it might be a little too cute but my publisher and editor loved it, so very early in the book’s development, I was committed. 

After the title was locked in, I had second thoughts. I was concerned that people might misinterpret what I mean by “low risk.” It certainly doesn’t mean hiding in a savings account or building a portfolio that ignores the possibility of growth. 

I was so paranoid about this that I remember asking the cover logo designer to “turn up” the risk meter on the cover by a couple of notches… and to this day I still wonder if I should have asked him to turn it up higher. 

At the time we were in the early stages of the pandemic, and most of us operated under the belief that once the population was mostly vaccinated, we would flip a switch and go back to the world as we knew it before March of 2020. 

Boy, were we wrong. 

Unfortunately, over the past two years the idea of “low risk” has taken on all sorts of negative connotations. In the same way that you can’t build a portfolio without some risk of capital loss, you can’t build a life without assuming some measure of risk.  

The biggest risk…

This past November I attended CPA Canada’s Mastering Money conference in Toronto (my first 100% “in person” conference since 2019). The conference was a success but not a sellout. Similar to many in-person events getting back off the ground this year, attendance is spotty as many are hesitant to return to “normal,” whatever that might mean to them. 

On the last day I grabbed a seat at a random lunch table, and was joined by only one other person. Just two people seated at a banquet table together eating some mediocre fried chicken. I can’t remember how, but the conversation quickly turned personal. 

It turns out that both of us had recently experienced the loss of a friend, unexpectedly and far too early. I mentioned that I was on my way back home early to attend a funeral, which would be my third in just over a month. For both of us, it was a season of loss. 

We had a very authentic and personal conversation, which is a rarity at an industry conference. I didn’t even think to grab a business card or get his last name. It was great. 

So this week I’m not just writing about financial markets, or laughing at crypto Ponzi schemes. Rather I want to stress the necessity of leaving your comfort zone. 

I’m going to encourage you to take those risks. Get out there and connect with people. 

Sure, you might catch a cold, flu, or Covid. There’s also, unfortunately, a tiny chance you develop long Covid and deal with longer-term health impacts. 

Also, your plane might crash. 

Your cab driver might drive into a post while texting his mistress. 

You might choke on a breath mint and die. 

But you know what? Most likely none of these things will happen. Instead, you might make some new friends. Learn something new. Share a drink with someone who makes you smile and shares a pearl of wisdom. You might make a connection that could change your life. 

Get back out there. Do it for those who cannot. The biggest risk is not taking one.