People often sort investments into two groups: “safe” and “risky.” Cash, money market funds, certificates of deposit (CDs), and bonds may feel safe because their values usually move less. Stocks may feel risky because their prices can rise and fall quickly. But every choice has some kind of risk.
In the big picture, there is only one real risk: Inflation. The Consumer Price Index, or CPI, tracks changes in the prices of everyday goods and services. Over the last hundred years or so inflation has increased by about three percent annually. At this rate, prices after 30 years (during a two-person retirement) would be about 2.4 times higher. Something that costs $1 today could cost about $2.43 then.
Cash, CDs, and bonds can help protect money from sudden market swings and provide peace of mind, but all have similar long-term outcomes: the reduction of purchasing power after inflation and taxes. Seeing steady statement values can give a false sense of security even while its buying power quietly shrinks.
Stocks have different risks, but they can provide growth and income. For example, the S&P 500 paid about $14.89 per index share in dividends in 1996 and $78.51 in 2025. Did you catch that? Over those 30 years, consumer prices (inflation) roughly doubled, while the cash dividend of the S&P 500 more than quintupled.
The index itself also rose greatly over that period, from 741 at the end of 1996 to more than 7,000 in 2025. The trip was not smooth, the index lost about half its value during two major downturns. Past performance does not guarantee future results, but logic as well as history suggests the results are on the side of their continuation.
So “safe” does not mean “no risk.” A stable investment may protect your dollars today but lose buying power over time. A stock investment may bounce around today but have more opportunities to provide income and growth over many years.
The bottom line: every investment has risk. The goal is not to avoid all risk; it is to choose the risks that fit your goals, timeline, and comfort level. If you are looking for an independent wealth management firm, give us a call. We would be glad to meet with you and see whether we are a good fit for each other.
Securities and Advisory Services offered though LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.
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