Jasmine Birtles
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Why Playing It Safe Is the Riskiest Investment Strategy
Ruby Layram
7th Mar 2025
No one likes losing money. So, the idea of “playing it safe” with investments sounds pretty good, doesn’t it? Stick to big-name companies, keep a chunk in a savings account, maybe buy a few government bonds, and boom—you’re set for life.
Except… you’re not.
Playing it too safe is actually one of the riskiest strategies you can adopt. It might feel comfortable in the short term, but over time, you could be losing out in ways you don’t even realize.
So, let’s bust this myth wide open and talk about what you should be doing instead.
A disclaimer: It’s important to note here that playing it safe is only ‘risky’ for investors who can afford to take risk and want to see growth. If you can’t afford to lose the money that you invest or plan on using it to fund big life expenses, there is nothing wrong with playing it safe!
Now that we’ve got that out of the way, let’s take a look at why playing it safe might be riskier than you think!
Safe Investments Aren’t Keeping Up With Inflation
You might think your money is “safe” sitting in a bank account earning interest. But have you checked inflation rates lately?
The inflation monster
If inflation is running at 3% and your savings account is giving you a whopping 1%, guess what? Your money is actually losing value.
It’s like trying to walk up a down escalator – you might feel like you’re moving forward, but in reality, you’re going backwards.
If you want to grow your wealth, your investments must outpace inflation. And sadly, a standard savings account isn’t going to cut it.
Big and Popular Companies Are Not Risk-Free
Many people assume that investing in big, established companies is a safe bet.After all, they’ve been around for years, they dominate their industries, and everyone knows their name. What could go wrong?
1. Even giants can fall
Ever heard of Kodak? Blockbuster? Lehman Brothers?
All were industry leaders. All seemed “too big to fail.” And yet, they did.
The lesson? Just because a company is successful today doesn’t mean it will be around tomorrow. Markets change, industries evolve, and new competitors disrupt the status quo.
You can read more about this in our recent post about the #1 investing lie that is costing you money!
2. Overpriced stocks can fall down
When a company is extremely popular, its stock price can get inflated beyond its actual value. People buy into the hype without looking at the fundamentals.
The result? When reality catches up, the stock price crashes, and investors who thought they were playing it safe get burned.
Take Netflix, for example. Once a darling of the stock market, it saw a huge drop when subscriber growth slowed. Those who blindly assumed it was a safe investment took a hit.
The Real Risk: Not Taking Any Risks
So, if playing it safe isn’t safe, what’s the alternative?
You need to take calculated risks.
That doesn’t mean gambling your money on dodgy crypto schemes or meme stocks. It means making informed, diversified investments that balance risk and reward.
1. Diversify, diversify, diversify
Putting all your money in one safe investment is like putting all your eggs in one very fragile basket.
Instead, spread your investments across different sectors, asset types, and even countries. That way, if one area takes a hit, the rest of your portfolio isn’t dragged down with it.
Read: How to build a diverse investment portfolio in 5 steps
2. Think long-term, not just short-term stability
Some people avoid stocks altogether because they’re too risky. But historically, the stock market has always trended upwards over the long run.
Yes, there are ups and downs, but if you’re investing for 10, 20, or 30 years, you can ride out the bumps and come out ahead.
3. Take smart risks for bigger rewards
The best investors aren’t reckless—they’re strategic risk-takers. Instead of blindly chasing safe options, they:
- Research undervalued stocks with growth potential
- Invest in industries poised for future expansion (think AI, renewable energy, and fintech)
- Balance riskier investments with stable assets, like ETFs and index funds
Key Takeaways
- Invest in the stock market. History shows that, over time, stocks offer higher returns than cash or bonds.
- Consider ETFs and index funds. These allow you to invest in a broad market, spreading risk while still capturing growth.
- Don’t fear volatility. Short-term fluctuations are normal—what matters is long-term performance.
- Keep learning. The more you understand investing, the better equipped you’ll be to make smart decisions.
The idea that playing it safe protects your money is one of the biggest investing myths out there.
In reality, avoiding risk completely can cost you more than taking a well-thought-out leap. Smart investing is about balance—not avoiding risk entirely, but managing it wisely.
So, next time someone tells you to just stick to the safe bets, smile, nod, and go do your own research. Because the real risk isn’t making bold moves—it’s standing still while everyone else moves forward.
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Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.
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