Why “Playing it Safe” ends up Being More Expensive in the Long-run

March 22, 2023

Recently we sent the following Financial Times article to a group of investors [primarily referrals] to help them understand our beliefs about rates of return and how they impact financial security.

Expectations about what it takes to accumulate sufficient assets to last through retirement need to be communicated clearly. I believe our clients understand the tradeoffs between returns and risk but sadly, I am not sure the average investor understands.

I understand risk and return is a subject all of us face but an honest discussion usually does not happen because avoidance of risk dominates thinking.

I welcome you to call me to discuss.  It is a subject that interests me now more than ever.

To be a good doctor or lawyer, for example, I think most of us believe we need and expect honest and truthful advice.  For example, it is up to us to decide if we really need surgery but we must live with the consequences of our decision.

I am not confident that when it comes to realizing the consequences of investment decisions it is fully understood what the avoidance of risk may mean for your financial security?

Please understand we at Curran do use low risk securities to include fixed income. About 35% of the funds we manage are in fixed income. But we never lose sight of the fact that low rates in bonds cannot do what stocks have achieved over the long run.  Of course there is volatility or what statisticians refer to as risk. The lower the risk the lower the return and that makes sense. But there is more to the story than simply reducing risk. That message must be communicated to you even if you do not wish to hear it.

Consider the following when you read “Staying safe can be costlier than living with risk”.  One penny invested in 1776 when our country was “born” would be worth the following in June 2022 depending upon the rate of return.

1%          12 cents

2%          $1.29

4%          $151.94

6%          $16,315.11

8%          $1,605,210.43

10%       $145,179,135.62

The long-term rate of return in bonds is about 3-4% but the long-term rate of return in stocks is around 10%.

The question is what do you expect low guaranteed returns to do for you that compounding over 245 years has not done since 1776?  Remember, unlike a delayed decision on surgery on a creaky knee, time really does matter.  We do not have 245 years to understand guaranteed low rates will not work unless we already have enough money to support ourselves. If you have that much money it does not matter what you do.

But if you are like most of us it really does matter.

It is your money so you have the right to do as you please. But never forget what a reasonable expectation should be in terms of securing your financial security.

Our belief at Curran is we all deserve and require an honest discussion from our financial advisor about what we can reasonably do and expect from the dollars we work so hard to earn. After 51 years in financial services, that touches on seven decades, I know those honest discussions rarely occur. My sense is we can all use an honest appraisal for where we stand in terms of securing financial security. There is too much pandering from advisors designed to sell what people want [income from dividends and interest] and not enough analysis for the consequences of being safe.

If you want an honest appraisal, consider Curran Wealth Management.

Originally published August 4, 2021

Our Financial Planning Process

At Curran we value service over sales and believe quality service yields happy clients. Below is our 4-step process (the first three steps at no cost to you).

Engage & Discover

A short introductory call for us to get to know one other. During this call we will discuss your financial goals, concerns and hopes for the future.

Goals & Data Gathering

In this meeting we will go over your current financial situation, take a deeper look at your goals, discuss your risk tolerances, and collect the data necessary to build a formal proposal.

Proposal & Evaluate

Based on our data gathering session, our Private Wealth Managers will present you with a custom proposal tailored to your needs. We encourage individuals to take the time to evaluate this proposal.


If you are comfortable with the proposal and choose to invest with Curran, our team will be there every step of the way assisting in opening the recommended accounts and facilitating all necessary parts of your onboarding process.