The Risk of Safe Bets

One common denominator among successful entrepreneurs, wealthy people, and business leaders: they embrace risk. Billionaire Charlie Munger once stated in an interview, "If you're not growing, you're decaying." I couldn't help but focus on this.

HARDWIRED TO SURVIVE

As humans, we're wired to think in terms of survival. So we're naturally pessimistic, skeptical, and risk-averse. Understandable. But modern-day failure isn't as costly as ancient-time failure. We live in an age of abundance in resources, knowledge, and technology. Statistically speaking, we're living in the safest of times. All this to say, it's safe for us to embrace risk.

(Book Recommendation: Factfulness: Ten Reasons We're Wrong About the World — and Why Things Are Better Than You Think by Hans Rosling with Ola Rosling and Anna Rosling Rönnlund)

IRONY OF ‘SAFE-BETTERS’

A trait I find in highly risk-averse people is they tend to cherry-pick what to fear without question. An argument could be made that there's risk in everything you do in life. There are over 243,000,000 registered drivers in the US as of 2025, but there's a large risk in driving a car. Even staying in one place has risks — your body will decay.

SEEKING DISCOMFORT

What would happen if we embraced the uncomfortable feeling of risk? My strongest growth periods have come from discomfort. Working entry-level jobs. Having a failed marriage. Getting rejected from countless job opportunities. Sharing my work online for the world. I could go on and on. It's easy to read about lessons, but firsthand experiences engrave them into your soul. Anything worth working hard towards is worth it because of the growth period you have to pursue. It's the old adage: "If it was easy, everyone would have it."

EXAMPLE

The creation of money allowed us to have a cohesive system that would allow for a mass population to operate together—as opposed to rugged individualism along with barter trading. That being said, money is a universal stress factor for most people, as it's linked to their survival, so I use this to illustrate my point.

I have a colleague who avoids individual stock investment because he perceives them as too risky—even megacap stocks like Apple, Amazon, or Walmart. His go-to reason is that if the CEO receives bad press, the stock will tank.

MY REACTIVE THOUGHTS

What are the odds a megacap "blue-chip" stock that offers tremendous value for consumers and has proven to be a dominant player in its industry will go out of business because of a CEO's bad press? Little to none.

What are the odds it will bounce back up? High, as this answer is historically backed.

In addition, I think of all the companies that have survived scandals, political backlash, and controversial CEOs like Elon Musk or Alex Karp. They get a lot of heat, but at the same time, their companies keep increasing in revenue and market share.

THE REAL RISK

What's the risk in not investing in stocks? Your savings will decrease in value due to inflation. Inflation isn't speculation, it's guaranteed. Most people who don't want to be an active participant in the financial world are best off leaving their money in a low-cost index fund of choice.

But I'll even take it a step further to highlight the importance of why risk-averse people might consider expanding their limits beyond index funds.

Stock vs Index Funds

Index funds are generally safe but take decades to result in a high reward. Individual stocks' risk varies depending on the company but could result in high reward in a shorter time — some as little as less than 5 years. I'd also argue that investing in promising young startups in hot sectors — after dedicated due diligence and research — could be more rewarding than an index fund.

Why is that?

The unlikely worst-case scenario → You lose your investment. Sell and write it off on your taxes.

The unlikely best-case scenario → You become wildly wealthy.

The likely pessimistic scenario → You lose most of your startup money, but the one front-runner that gets government and enterprise contracts becomes the industry leader. Not only would you recoup your losses, but you'd generate wealth.

The likely optimistic scenario → You multiply most of your startup money, but we have some losing dead-weight stock that we could sell to offset taxes.

Specific Scenario:

I'll focus on my colleague's individual excuse.

He buys stock in Amazon → Jeff Bezos says something controversial → Stock price tanks.

Two Options

1.) Sell & Tax Harvest.

2.) Buy Discounted Stock. (This is what I'd do)

I know this works because Warren Buffett does this.

My colleague and I have both been broke, I've even been homeless. But there's a fundamentally different mindset between us.

When the topic of being broke arises, he states "He's not going back" and I say "I'm not afraid of going back". I don't fear most things I've overcome. I'm not saying I'd gladly go broke again. But fear doesn't lead me.

The real risk is not taking risks.

Disclaimer: This isn’t financial advice. I’m not knocking index funds. I’m highlighting the importance of embracing risks, critical thinking and finding growth through discomfort.