When Playing Safe Is the Biggest Risk

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The Fascinating Story of Pain

One of the most fascinating stories I’ve encountered is that of Gabi Gingras, a girl born with a rare genetic condition that prevented her from feeling pain.

When I first read about her life, I thought, “What an incredible superpower!” Living without pain sounds amazing, right?

However, as I learned more about her life, I realized that what initially seemed like a blessing was actually a curse. Gabi could feel touch but had no sense of pain, which meant she never learned crucial lessons. For instance:

  • When she bit her tongue, she didn’t realize it and ended up in the hospital with severe swelling.
  • As a baby, she chewed her fingers until they bled and scratched her eyes so badly that doctors had to temporarily sew her eyelids shut.
  • Her father made her wear swim goggles when she was younger to protect her eyes from additional damage.
  • Today, she has lost vision in one eye and is nearly blind.
  • Gabi touched hot stoves and fell multiple times without crying or learning to avoid danger.

Pain, it turns out, is not an enemy—it’s a teacher. Without it, Gabi never learned what not to do.

Gabby wearing swim goggles to protect her eyes

What Does This Have to Do With Investing?

Gabi’s story teaches us a fundamental lesson: pain is essential. It provides the feedback we need to correct our actions and learn from our mistakes. Without it, we act recklessly and put ourselves in danger.

The same lesson applies to investing. Indians have a deep-rooted love for Fixed Deposits (FDs). Nearly 15% of the country’s assets are locked into these “safe” investments. They offer a sense of comfort, much like Gabi’s view of a pain-free life.

However, just as Gabi learned that pain is necessary for survival, FD investors must understand that avoiding risk in the short term can lead to significant long-term consequences.

The Real Risk in Playing It Safe

“The real risk is thinking it is safe to play it safe.” This applies to both life and investing. Fixed Deposits provide a false sense of security. Yes, they shield you from market volatility, but at what cost?

  • The real danger lies in inflation—the silent killer of wealth. With inflation averaging around 6%, FD returns barely keep up, and over time, the purchasing power of your money diminishes significantly.
  • Plus, they are taxed according to your tax slab. The comfort you seek today comes at the cost of comfort in the future.
Real Returns in FDs

Comfort Now Vs. Comfort Later

When you invest in assets that promise lower volatility (such as FDs), it feels as though you’ve eliminated risk from your portfolio. However, the truth is you haven’t eliminated risk—you’ve simply shifted it to the future. Here’s why:

  1. Lower Volatility = Lower Long-Term Returns: FDs offer stability, but at the price of minimal growth potential.
  2. Lower Long-Term Returns = Lower Probability of Achieving Your Goals: If your long-term financial objectives require a 10-12% annual return, a conservative approach might jeopardize those aspirations.
  3. Lower Probability of Achieving Your Goals = More Risk: By avoiding risk today, you’re increasing the likelihood of falling short tomorrow.

Most investors don’t realize this trade-off until it’s too late. You feel safe in the present, but the future reveals the hidden risk of not achieving your financial goals—whether it’s retirement, children’s education, or buying a home.

Certainty Vs Return, Image Credit – Money Visuals

Embracing the Discomfort of Investing

Discomfort, like pain, is a teacher. Embrace some volatility as it offers valuable feedback. Here’s how you can manage this discomfort:

  • Diversify Your Investments: Combine debt funds with equities or mutual funds to balance growth and risk.
  • Reevaluate Your Risk Tolerance: Understand your comfort with market volatility, but don’t shy away from opportunities that involve some risk.
  • Seek Financial Guidance: Instead of trying to equip yourself with all the knowledge, reach out to experts for personalized financial advice.
  • Automate Your Investments: Set up Systematic Investment Plans (SIPs) in mutual funds for consistent investing, even during market downturns.

Re-Defining Risk

Many investors believe that risk is about avoiding market volatility. In reality, the true risk is failing to achieve your long-term goals. Volatility isn’t the enemy—it’s a necessary part of growth. Embracing it helps your investments grow, keeping pace with inflation and securing your future. The more short-term certainty you seek from your portfolio, the more long-term uncertainty you introduce into your financial life.

Final Thoughts: Embrace the Pain, Achieve Your Goals

Gabi Gingras’s story reminds us that pain, while uncomfortable, is essential for learning and growth. The discomfort of market volatility in investing teaches valuable lessons, shapes your strategy, and ultimately leads to financial success.

So, the next time you’re tempted to avoid the discomfort of market fluctuations, remember: the real risk is in playing it safe. Start investing wisely, and your future self will thank you.

Are You Ready to Take Control?

Are you ready to redefine risk and take control of your financial future? Explore investment options beyond FDs and embrace a strategy that aligns with your long-term goals. Click here to schedule a call with me.

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