There is no such thing as 100% safety, there are only trade-offs

Like many other people, I get emails.

One thing I noticed about these emails in 2020/21 is that many of them ask whether I am “staying safe”?

Sadly not…I have been involved in that dangerous activity called “life”.

Scientific studies show that 100% of lives end in death.


At primary school we learned about something called “history”, a place in the past where many interesting things happened.

For those not familiar with history, it was not always safe. There were wars. There were plagues. There were papercuts. I don’t have enough space in a 1,500 word blog post to cover everything in “history” but a lot of dangerous stuff happened, health & safety be damned.

This makes me wonder. Did we get more risk averse in recent years?

Did we come to take safety, comfort and convenience for granted? Has a cult of safetyism, an extreme form of desire for safety, taken over our schools, universities and our public discussions?

Jonathan Haidt and Greg Lukianoff say yes and wrote a book about it.

The problem with safetyism

In The Coddling of The American Mind, Haidt (a liberal psychology professor at New York University) and Lukianoff, a law professor, define safetyism as follows:

Safetyism refers to a culture or belief system in which safety has become a sacred value, which means that people become unwilling to make trade-offs demanded by other practical and moral concerns. “Safety” trumps everything else, no matter how unlikely or trivial the potential danger.

When children are raised in a culture of safetyism, which teaches them to stay “emotionally safe” while protecting them from every imaginable danger, it may set up a feedback loop: kids become more fragile and less resilient, which signals to adults that they need more protection, which then makes them even more fragile and less resilient”

The Coddling of The American Mind

Financial safety

If you are anything like me, you got interested in money motivated by a mixture of fear and hope.

In my case it was more fear than hope. Ever since my parents took out the biggest mortgage possible and interest rates then went to 17%, I’ve always thought of being in debt as a scary thing. After that, I spent much of my life visualising myself living homeless and eating catfood and cockroaches rice and beans to survive.

As someone smart once said: I have lived through many terrible things in my life…most of which never actually happened.

I can see The Dark Side

Monty Python famously sang: “Always look on the bright side of Life”.

But it was an ability to see The Dark Side that triggered me to save. It’s why I was always so keen to fix the roof whilst the sun was shining. But at some point we have to ask: how much is enough?

You probably have enough to never work again when you have 25x your annual spending. Or to put it another way, a a 4% withdrawal rate is probably safe.

Sometimes this sparks accusations of being too dangerous. But when I see those debates, I can’t help thinking…what about this:

Safety is a mirage

Please believe me when I say that I understand the desire for safety first in your finances.

It’s just that if you are looking for 100% safety, you are chasing a mirage. There is no such thing as 100% safety there are only trade-offs.

You can take your risk as 1) running out of money 2) inflation risk 3) the risk of loss of capital or 4) volatility. You get to pick your poison but there is no zero risk option on the menu. It doesn’t exist.

You think cash in the bank is safe? What about inflation?

As I may have mentioned before, your cash is like an ice sculpture at a party. You can’t see it melting away…but it is. With 3% inflation and 0.5% interest rates, your cash loses HALF of its value every 29 years or so. That’s pretty scary to me.

Property and the stock market grow their real value over time. Houses are generally thought of as safe because they’re the only asset class where most people sit tight and allow compounding to work its magic over decades. What would happen if we behaved the same way with a global equity index tracker?

Could I lose everything?

Someone recently asked me whether they could lose everything if they invested in a global tracker fund?

Yes, if the world ends, we could lose everything. But if that happens then who cares about money anyway? It’s possible that the sun explodes next year or aliens invade tomorrow or that Scotland win the next World Cup. No investment is immune from alien invasion, end of the world or act of god.

But is that how you want to live? Cowering against the prospect of imaginary ghosts, goblins and ghouls? Living in a horror film of our own imaginations?

I say no. Better to die on your feet than live on your knees.

Nothing great was ever achieved without risk

No mountain was ever conquered without risk. No heart of fair lady was ever won without risk. No new world was discovered or new business started without risk. The risk is part of the process.

There is no reward without risk.

The News tells us to be afraid of the Big Bad World. So we try to avoid risk by clinging onto cash that we squirrel away under the mattress or in the bank earning zero interest.

The Prison Camp has taught people to know their place and associate the stock market with risk. Every time you see an investing advert it has dire warnings that you could lose everything. So most people think that the stock market is dangerous.

This is nonsense. Ebola is dangerous. Juggling chainsaws is dangerous. Free-climbing mountains without ropes is dangerous. The stock market contains risk. But the main risks are easily avoidable if you buy and hold a global equities index tracker fund for the long term.

Volatility is your friend

The stock market is a rollercoaster ride. The thing about rollercoaster rides is that they feel scary but are actually very safe as long as you fasten your seat belt, don’t panic and don’t jump out halfway through the ride.

Volatility is the friend of the long term investor. Volatility is the source (and the price) of the superior long-term returns delivered by the stock market.

Trying to avoid volatility encourages retail investors to do things like “reach for yield” in peer to peer lending. This works until it doesn’t. Just like turkeys get fed in the run-up to Christmas…until they don’t.

Financial risk can not be eliminated. It can be managed, mitigated, transformed, packaged up, sold and re-distributed but it can not be removed from the world. You either accept your risk as volatility or you take your risk as something much deadlier.

Know thyself

You can have a lot of money and still not feel like its enough. Money alone can not provide the feeling of security that we often look for it to provide.

There are some problems that money is very good for fixing and some things that it just can’t fix. If you don’t feel like you are enough, then you probably won’t feel like you have enough.

If you want to stop worrying about money, you have to do 2 things. One, build wealth (starting with getting out of debt and saving an emergency fund). And two, you may also need to do some internal work.

If you grew up middle class, you have been fed security your entire life. This will keep you from ending up in the gutter, but you’ll always be risk averse.

Most ways to freedom of time or money involve taking calculated risks that are beyond the comfort zone of most people. I don’t mean things that are inherently dangerous or scary, but things with no guarantee of a secure outcome.

Ed Latimore

Be braver

I’m not saying that everyone should blindly take more risk. But I am saying that there will come a point where an intelligent investor should be braver.

Once you understand that the stock market will fall by say 25-50% from time to time, then maybe you’re ready to be braver?

If you owned a slice of the stock market and held your nerve without selling through the Covid crash of Q1 2020, you’re probably ready.

“in the world of securities, courage becomes the supreme virtue after adequate knowledge and a tested judgement are at hand”

Benjamin Graham, The Intelligent Investor, 1973

The Escape Manual is explained * here *


  1. Fire And Wide · · Reply

    Love this. So many people try to find absolute security – and that’s never going to happen. Everything we do comes with a degree of risk, either to ourselves or others.
    The point (which you’ve well-made) is to knowingly take the risks you want to. There are no magic answers, just choosing as wisely as you can.
    Cheers – enjoyed it!

  2. “Everything is sweetened by risk” Alexander Smith, Scottish Poet 1859

  3. “Did we get more risk averse in recent years?”

    Haha, Does the Pope poop in the woods? Are bears Catholic? Wait…. 😉

  4. melancholia is a very interesting film that contrasts two sisters’ reactions to an impending rogue planet colliding with earth. thought i’d mention!

  5. Karen Anderson · · Reply

    Great post EA. So if you save your six month mergency fund which has to be easy to access, what advice do you have for minimising the effects of inflation on this?

    1. ossama bin laden · · Reply

      “So if you save your six month emergency fund which has to be easy to access, what advice do you have for minimising the effects of inflation on this?”

      well, an emergency fund does not have to be in pure paper cash stored at home, for one. If you put some into gold coins, some in silver coins, some in constantly used and renewed 6 months reserve of spare bags of beans, spaghetti packs, muesli, dried fruit, sugar, you refuel your car when it reaches half tank level, and so on, you already lower your risk level of depending on your bank and retail shops staying open for business on a daily basis. And if you then mix some home cash with a sprinkle of USD, Euro, and other currencies, open a bank account in a foreign country with some funds in there (like stocks etc to get dividends and share price increase potential, thus make money) that can be sold at the blink of an eye, and that foreign account has a Visa or Amex or other debit/credit card attached to it, it can become a digital backup source of cash if you go to your local ATM to withdraw paper cash, or pay the groceries, or buy stuff from the internet to be delivered to your door. Avoid bitcoin though, they are only electrons. If you do all this, you have spread out your risk over many assets, thus achieve a more robust situation, whatever happens down the road. Being Antifragile is difficult, but not impossible.

    2. Missed point. EF is not an Inflation protected investment. Rather, it is an insurance policy to minimize the chance of needing to liquidate an equity portfolio during a downturn. I hold mine in a ‘high interest’ online bank account.

      1. Thanks Chris.

        1. We went with Premium bonds and small portion Marcus (GS). Safe in PB with (maybe?) 1% if luck is on our side and 0.5% from Marcus but instant access.

        2. Karen Anderson · ·

          Thanks Daniel.

  6. ladyaurora · · Reply

    TEA thoughts always resonates with me, so I always enjoy what he has to say.
    Reading about a celebrity hairdresser who refuses to invest in stock market as he said it was just ” “gambling!”🤦‍♀️
    My concerns now are not stock market volatility, is broker risk.
    So I’m considering splitting my ss isa between 2 brokers. Currently with I web now considering adding ii.

  7. If you owned a slice of the stock market and held your nerve without selling through the Covid crash of Q1 2020, you’re probably ready.

    Hmmm… In my brokerage account I like to keep 10% in dry powder. As the market fell >10% I put 1/2 in. Then every 5% further down I put another 1/2 in. Once the market returned to prior peak I reallocate back up to 10% cash in steps.

    I rebalance on my birthday or during major moves.

    Guess I’m ready 🙂

  8. True enough, there is no such thing as 100% safety. But there is safer and riskier.

  9. “Without selling”. Leveraged up and bought more camp over here – but being a financial disaster till the age of 35 I had/have a lot of catching up to do!

    Not a good idea for your mental health overall when you’re imprisoned at home alone for the best part of a year, but a really good way to figure out your risk tolerances. We are dealing with amounts where by mistakes could be out earnt with the day job. I guess it’s good to make mistakes/try new things now, with less 000’s at stake.

    Worked out pretty well, as someone who e.g. started investing in RDS.B for £22+, not buying at £9 seemed silly. Very much back in black. I predicted the Wuhu-flu would be done by May, seems the universe had other ideas but we have recovered and profited overall.

    Oh and I cringe when anyone utters Stay Safe within ear shot, the avoidance of death at all costs is not living.

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