More about Planswell
Build a free plan in 3 minutes! Start now

Why NOT investing is riskier than investing

Table of Contents
Confusion about what to invest in Fear that the market will go down Lack of money to get started

Wayne Gretzky said, “You miss 100% of the shots you don’t take.” In other words, if you take the shot, you could miss the net. Or a defenceman could deflect the puck. Or the goalie could make a save. Failure is a distinct possibility. But if you don’t take the shot, failure becomes an absolute certainty.

This is a great analogy for investing. There are many reasons people choose not to invest, including confusion about what to invest in, fear that the market will go down, and lack of money to get started.

But as The Great One said, refusing to take the shot can almost guarantee that you won’t reach your financial goals. For most of us, those goals revolve around having enough money to feel financially secure while we’re working, and enough money to live a comfortable life once we’re retired.

Let’s compare what it’s like to reach those goals as an investor versus as a non-investor:Sandy is 35 years old. She puts $500 per month into her RRSP, which goes into very safe GICs and money market funds that pay her a return of about 2% per year.

Yen is also 35 years old. She puts $500 per month into her RRSP as well, but she invests in a mix of stocks and bonds that pay her an average return of about 6% per year.

So Sandy and Yen are the same age and save the same amount, but their investment choices will produce vastly different results. At age 65, Yen will have just over $500,000 in her RRSP, which is enough to provide her with the retirement lifestyle she was hoping for. Meanwhile, Sandy will have less than $250,000 in RRSP, which is not enough to live life the way she wants in retirement.

Yen clearly took a risk by choosing to invest in stocks and bonds. Sure enough, she had some bad years along the way. Her portfolio fluctuated from month to month and year to year, and there were times when she didn’t feel great about seeing her portfolio lose value.

But Sandy also took a risk. By not investing her money aggressively enough, she ended up at age 65 with only half as much money as she needed to retire. Now she’s stuck with this result, and she has no way to turn back the clock.

So which investor took the biggest risk? Yen, who rode the ups and downs of the stock and bond markets but retired comfortably, or Sandy who stuck with “safe” investments but now needs to keep working or drastically reduce her retirement plans?

If you are uncomfortable with the idea of investing, let’s break down some of the barriers.

Confusion about what to invest in

The easiest and most successful way to pick investments is to not pick them at all. In fact, piles of research have shown that even professional stock-pickers are no better at it than throwing a dart at a page. According to Morningstar research, not one single mutual fund manager beat the S&P500 stock market index over the past five years.

So what should you do? Buy exchange-traded funds (ETFs) that capture hundreds or thousands of stocks or bonds in a single investment. Rather than trying to pick a winner, the idea is to participate in the overall growth of the market. This approach is not only a lot simpler than trying to outsmart the market, it’s also shown to be much more profitable over time.

Fear that the market will go down

Of course the market will go down! That’s the first thing you need to accept. But here’s the surprising part: even if you invested your money the day before every major market crash of the past 50 years, you’d still end up making money over the long term.

The reason is simple: the market always goes up over time. The entire world economy relies on healthy, dynamic stock and bond markets to function. Yes, there are occasional hiccups. But despite every challenge that’s come along — from the Great Depression and two World Wars to 9/11 and the 2008 financial crisis — the markets have always resumed their slow but steady march upwards.

Lack of money to get started

The beauty of ETFs is you don’t need a lot of money to get started. In fact, setting up a monthly investment that you can afford and sticking to it month after month is the simplest and most effective way to go for most people.

However, there is a catch. You probably won’t get much help from a bank or financial advisor unless you have hundreds of thousands of dollars to invest. In fact, the vast majority of people lack the wealth or the good fortune to have a trusted advisor who can help them get started with an investment plan and continue to guide it until they reach your goals. But that’s what a financial plan from Planswell is for! We’ll help you explore your investment options and find out what works for you.

Just remember, risk is a fact of life. If you invest too aggressively, you risk losing money. If you invest too conservatively, you risk falling short of your goals. The trick is to understand what risks you are really taking and choosing the path with the highest probability of reaching the outcome you desire.

If you look at the past 100 years of economic history and do a bit of math, you’ll come to the inescapable conclusion that being an investor is the best way to grow your wealth over time. And if you’re willing to take that shot, there’s a really good chance you’ll win the game of life.

Interested? Create your free plan and see how your investments can help you plan for the future.


The best financial plan is also the easiest.

Build a plan now.

Start now