David shares this story. I know a man (not a client) from a wealthy family and, back in 2000, his mother gave him $1 million. He thanked her and promptly deposited it in the bank. It’s still there.

When the financial crisis hit in 2008 and the markets plunged 40%, he felt rather pleased with himself for having avoided that plunge. However, fast-forward to today and, even with our current low inflation rates, that $1 million has lost 33% of its value. Meanwhile, others who remained invested after the Great Recession have done just fine. Had this man owned a portfolio, sold his holdings and gone straight to cash with the proceeds, the results would have been the same.

So, is cash actually a risk-free asset?

The answer is no. There is no such thing as a truly risk-free asset for long-term investors. When it comes to investing, we don’t live in a risk-free world, and there really are no risk-free investments – even cash.

You are kidding yourself if you believe you can avoid any risk when it comes to your money and investing.

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