Money Talks: The Risks of Always Playing It Safe—As a Parent and an Investor

"Kids need to be safe as necessary, not safe as possible."

— Dr. Emilie Beaulieu 

My wife shared this quote with me, and it stuck. Probably because she’s always known when to step back and let our kids figure things out. We were the ones who got side-eyes from other parents when we let our toddlers climb too high, run too fast, or explore a little more freely on the playground. 

Not reckless, just pragmatic.

When our 9-year-old rides his bike to the library, I still feel that pang of worry. But my wife reminds me, fostering independence is part of the job. Keeping him bubble-wrapped would create bigger problems down the road.

Investing Works the Same Way

We instinctively know kids need to face risks to grow. So why do we assume the safest option is always the best one when it comes to investing?

The impulse to avoid discomfort leads to decisions that feel safe but create long-term risk. Investors mistake being safe for feeling safe. 

They pull out of markets at the first sign of volatility, avoid stocks for the false security of cash, or build portfolios that feel safe now, only to wake up in a future where they’ve outlived their money.

Being as safe as possible means eliminating all risk, which sounds great, until you realize it also eliminates opportunity. Just like overprotective parenting creates fragile kids, over conservative investing can create fragile financial plans.

The Right Kind of Safety

Good parenting isn’t about eliminating risk; it’s about managing it intelligently. You don’t ban your kid from ever crossing the street. You teach them to look both ways.

Investing works the same way. A good portfolio isn’t built to avoid all volatility, it’s designed to take the right amount of risk to reach your goals while having enough protection to withstand market uncertainty.

What’s the Fix?

Are you investing based on fear or financial reality? There’s a difference. Here’s a simple test:

• Risk Capacity (Reality): How much risk you can afford to take based on your financial situation. It depends on factors like your time horizon, income needs, and overall wealth. If a market downturn wouldn’t force you to change your lifestyle or long-term plans, your risk capacity is high. If losses could derail your retirement or require major cutbacks, it’s low.

• Risk Tolerance (Emotion): How much risk you can handle psychologically before panic sets in. Some people can watch their portfolio drop 20% without blinking. Others lose sleep over a 5% dip. Your tolerance isn’t about what’s financially possible, it’s about what you can emotionally endure without making bad decisions.

A critical part of my job as an advisor is understanding both. What’s real (capacity) versus what’s emotional (tolerance), and finding the right balance for you. It’s not about taking the most risk you can afford or avoiding volatility at all costs, it’s about making sure your portfolio is aligned with your personal ability to stay invested and meet your goals.

And that sometimes means having tough conversations. Because the investor who avoids risk at all costs is making the same mistake as the parent who never lets their kid climb a tree.

Growth requires some risk. The key is knowing how much you truly need.

Investing can be a lot like parenting, "be as safe as necessary, not as safe as possible."

About This Series

The Money Talks blog series explores timeless quotes on wealth, investing, and life, diving into the lessons they offer for making smarter financial decisions. These are the quotes we live by—guiding principles that inspire us to rethink how we manage wealth and life in our complex world.

About the Author

Carson McLean, CFP®, is the founder of Altruist Wealth Management, a flat-fee, fee-only fiduciary firm. With over 15 years of experience, he helps clients make smarter financial decisions by balancing risk and opportunity. When he’s not advising, he’s navigating the adventures of parenting four kids with his wife Ellen.

Disclosure:

This piece is for informational purposes only and does not constitute personalized investment advice. Investing involves risk, including the potential loss of principal. Financial decisions should be made based on your individual goals, time horizon, and circumstances.