When people talk about “safe” investments, what they usually mean is an investment where they won’t lose money. That’s a natural desire — nobody likes watching their balance drop. But here’s the truth: In investing, safety is always relative.
Every option involves some kind of trade-off between risk and reward. Some protect your principal but don’t grow much. Others offer growth potential but with ups and downs along the way.
As Clark often says:
“The risk you should fear the most is not that the stock market will go down for a while, it’s that your money won’t grow enough to last.”
So let’s look at the most common types of investments, how people perceive them as safe, and why that perception is only partly true.
How People Perceive Safety
For most people, the word safe means one thing: “I won’t lose money.” If the balance can’t go down tomorrow, that feels safe. If an institution guarantees repayment, that feels safe. If something has always gone up in the past, people assume it’s safe in the future.
The problem? That definition of safety works only in the short term. Over the long run, what feels safe can actually carry hidden risks such as inflation, interest rate swings, or the danger of underperforming for your needs.
Cash (Savings Accounts, HYSAs, CDs)
In the near term, cash is about as safe as it gets. FDIC insurance protects deposits up to $250,000, which means your balance won’t go down. That’s why people think of savings accounts and CDs as completely safe — the government guarantees them, and you’ll never see a negative number in your account.
But that sense of security is deceptive over time. While you don’t lose dollars, you steadily lose buying power. Inflation erodes what that money can purchase, and $10,000 today won’t buy what $10,000 can in 20 years. So cash offers very high short-term safety but low long-term safety.
It’s almost impossible to save enough money for retirement using savings accounts and CDs.
Bonds
Bonds feel safe because they’re “fixed income” in that you expect steady interest payments and the return of your principal at maturity. Individual Treasuries held to maturity deliver on that promise and are quite reliable. But bond funds can lose value when interest rates rise, as they did dramatically in 2022. And even if you hold individual bonds, inflation chips away at your real returns over time.
If you need to sell before maturity, or if you hold a bond fund during a rising-rate period, you can absolutely lose money. So bonds offer moderate safety in both the short and long term. They are steadier than stocks, but not immune to risk.
Total Market and S&P 500 ETFs
The stock market can drop 20–30% in a single year, which makes broad market ETFs feel risky in the short term. People invest in them anyway because historically, these funds have delivered growth well above inflation over decades. The market always “comes back,” and you own a piece of the entire economy rather than betting on individual companies.
But it’s important to note that you must hold through downturns to realize long-term safety. If you need the money soon, a crash can wipe out years of gains before you have time to recover. That’s why Clark emphasizes the importance of your timeline:
“If you need the money in less than five years, don’t put it in stocks.”
So while total market ETFs offer low short-term safety, they provide high long-term safety, as long as you can weather the inevitable storms.
Stock Funds With Strong Track Records
Some mutual funds have beaten the market for years, even decades. Star managers and actively managed funds with impressive track records look like “winners.”
Dave Ramsey, for example, often points to mutual funds with long-term averages around 10-12%. “When I say you can make a 12% return on your investments, I’m using a real number that’s based on the historical average.”
These funds can drop just as quickly as the overall market in the short term, so they offer low immediate safety. But what about the long run? Research consistently shows that most actively managed funds fail to beat the market over time. Past outperformance doesn’t guarantee future outperformance, and the “safety” here depends on a manager continuing to do something very few manage long-term. That makes long-term safety uncertain rather than assured.
A Diversified Portfolio
“Don’t put all your eggs in one basket” makes intuitive sense, and owning different things does feel more stable. A balanced portfolio of stocks, bonds, and other assets can soften downturns and is one of the most effective ways to reduce risk while ensuring growth. That gives diversification moderate short-term safety and high long-term safety.
The catch is that in big downturns, many assets fall together. Diversification reduces the risk of catastrophic loss, but it doesn’t guarantee gains year to year. You’re smoothing out the ride, not eliminating volatility.
Gold and “Safe Havens”
Gold feels timeless and tangible, especially in uncertain times. It often rises during crises, which reinforces its reputation as a protector of wealth. But gold’s short-term behavior is unpredictable; it can drop quickly even when you’d expect it to shine. Over the very long run, it holds value across centuries, but it hasn’t consistently beaten inflation or stocks.
Gold doesn’t pay income, and its price can stagnate for long stretches. It can hedge risk, but it’s not a reliable growth investment. That makes its safety mixed at best — useful as part of a broader strategy, but not a foundation.
The Real Answer: Safety Depends on Time Horizon
If you’re asking, “What’s safe?” the answer depends entirely on when you’ll need the money and what you’re protecting against.
For money you need in under five years, cash and CDs are safest. For a five- to ten-year horizon, bonds and a diversified mix help balance stability and growth. For ten years or more, stocks and index funds are your best bet to beat inflation and grow wealth.
As Clark puts it:
“There’s no such thing as a completely safe investment. The safest thing is aligning your money with when you’ll need it.”
Final Thought
A perfectly safe investment doesn’t exist. What you can do is choose the right type of safety for your situation. Use cash for near-term needs, bonds and diversification for medium-term balance, and broad stock funds for long-term growth. Be cautious of “winner” funds where past performance may not continue.
The real safety comes from aligning your money with your timeline, not chasing an illusion of zero risk.
