What Does Safety Mean to You?
After a screening of the Errol Morris film Tune Out the Noise, a colleague overheard two women talking about it. “What did you think?” one asked. The other thought a moment and said, “It made me feel safe.” That one sentence made me so proud, because the reason we decided to work with the Academy Award-winning director was to help more people discover there’s a better way to invest.
But I want to be careful with that word, because “safe” means different things to different people. Some of us hear it and picture a world where nothing bad ever happens, where markets only go up and you never lose a dollar. That kind of safety doesn’t exist, not in life and not in investing. When you own stocks, there are always going to be ups and downs. Real safety isn’t the absence of trouble. It’s the confidence that whatever happens, you’re going to be okay.
I don’t think that woman felt safe because the film—which tells the story of how finance became a science—taught her how to create the perfect mix of stocks and bonds. What the experience gave her was something harder to come by: It explained how public markets really work, in language she could actually follow. For maybe the first time, investing stopped feeling like a rigged game run by insiders and started making sense to her. The people on the screen had earned her trust.
Feeling like an outsider, like everyone else knows a secret you don’t, is its own kind of fear. Coming to understand how something works is the beginning of feeling safe around it. We develop this understanding over the course of our lives. You feel safe in a car going the speed limit on the highway. Something could always go wrong, but you trust how the car was built, you know how to drive it, and you trust that the people in the other lanes will mostly follow the rules of the road. Even though risk is still there, you’ve prepared for it the best you can.
The free-solo climber Alex Honnold does one of the most dangerous things on earth: He climbs thousands of feet of rock with no rope. You might assume he’s fearless. He’s not. Honnold has said he feels afraid mainly when he hasn’t properly prepared for a climb. So he rehearses every move, studies the rock, watches the weather and the way the light falls on the wall. By the time he starts for real, the fear has mostly drained away, because he’s done the work. (During the climb itself, his own nervousness would be the real danger.) Investing is nothing like hanging off a cliff, or at least it shouldn’t be. But the fear works the same way: It comes from being unprepared. Preparation for an investor is simpler than many in the industry make it sound. I think it boils down to three things:
- Have a plan you actually believe in, one built around your life and your goals, not someone else’s hot tip or forecast.
- Buy the market rather than betting on individual stocks. Owning a broad, globally diversified slice of the world’s public companies means your future isn’t riding on any one business, country, or forecast. If a single company or even a sector stumbles, you’re likely to be fine. You’re betting on human ingenuity: people all over the world working to build and invent.
- Choose a mix of stocks and steadier, relatively riskless assets that fits your particular situation. Ups and downs that keep some people awake at night barely register for others. The right mix is the one that lets you stay in your seat when the market gets turbulent.
Notice what’s not on the list is predicting what will happen next quarter, or getting out of the market before the next drop and back in before the next rally. Nobody does that reliably. Safety comes from an approach sensible enough that no single event can blow it up. When you’re not living at the mercy of the next headline, you may find it easier to breathe. You can’t control the market, or interest rates, or elections, or which way the economy turns next year. But you can control whether you have a plan, whether you’re diversified, whether your mix fits you, and whether you stay in your seat. So control what you can, and manage the rest.
A friend recently reminded me how this feels. His sister was turning 60, and she had just sent the last of her kids out into the world. For 30 years she’d quietly put money into her 401(k), never quite sure it would add up to enough. Then she finally sat down with a financial advisor, looked at the whole picture, and learned she was going to be OK. Not long after, the government went into one of its shutdowns, and all the old noise started up: jobs, budgets, what might get cut. The version of her from a year earlier would have panicked. Instead she told her brother, “You know what? No matter what happens, I’ll be OK.” Nothing about the world had gotten safer. She just felt safer.
Once you truly believe that, you can stop bracing for disaster and turn your attention to better questions: What do I want my investments to do? Whom do I want to help? What kind of life am I building for myself and the people I love? I’ve come to think of that feeling of safety as one of the cornerstones of what I call True Wealth, right alongside family, friends, health, and the freedom to spend your time on what matters. Once you’ve done everything you reasonably can, the only thing left to do is live.
Which is why I’ve started asking people a simple question, and why I’d encourage you to ask it too, of yourself, your spouse, your clients: What does safety mean to you? Sometimes what feels like a money problem is really an emotional one, and the fix is a simple conversation. That’s not a small thing. It might even be the whole shebang.
Stay calm, stay invested, and let markets work for you.
David