Is any investment safe? (11 2 25)

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We all want the peace of mind that comes with a "safe investment," but the truth is that chasing zero risk can be the riskiest move you make for your future. This week, we break down why traditional safe havens like cash and CDs are deceptive over the long run and explain how real safety is really found.

Here’s what we’re covering in today’s Clark Smart Investing newsletter:

• Are any investments safe?

• What’s the “retirement smile?”

• 6 steps to choose the right relocation spot in retirement

• 8 ways to use money to increase your happiness

• Q&A: How do asset fees actually work?

• Smart money move of the week

💵 Is There Such a Thing as a Safe Investment?

When people talk about “safe” investments, what they usually mean is an investment where they won’t lose money. That’s a natural desire — nobody likes watching their balance drop. But here’s the truth: In investing, safety is always relative.

Every option involves some kind of trade-off between risk and reward. Some protect your principal but don’t grow much. Others offer growth potential but with ups and downs along the way.

As Clark often says:

For most people, the word safe means one thing: “I won’t lose money.” If the balance can’t go down tomorrow, that feels safe. If an institution guarantees repayment, that feels safe. If something has always gone up in the past, people assume it’s safe in the future.

The problem? That definition of safety works only in the short term. Over the long run, what feels safe can actually carry hidden risks such as inflation, interest rate swings, or the danger of underperforming for your needs.

In the full article, we’ll look at the most common types of investments, how people perceive them as safe, and why that perception is only partly true.

📚️ Recommended Reading

✅ Poll: What’s Your Take?

Every week, we'll ask a new question to get your take on the latest financial trends and topics.

Last Week’s Poll Results

We asked: “Do you think the stock market is overvalued right now?” Here’s how you answered:

• Yes: 75%

• No: 25%

💬 Ask an Advisor

In this recurring Q&A, we share questions that have been answered by Clark Howard or Wes Moss on the podcast. Submit your question today!

Andrew in Iowa: I have a question on how asset fees work. It seems to me like the only two ways to charge an asset fee would be A) the issuing company lowers the fund’s price from what it was, pocketing the difference, or B) keeping the fund’s price the same but a fraction of each share is basically forcibly transferred back to the issuing company. If Option A is how it works, that would already be taken into account when viewing price history charts. But with Option B, I’d have to do that math myself to find true performance. Which option is more accurate, or is there a different explanation I hadn’t considered?

Wes Moss says: It's actually a bit simpler than the two options you suggested. I can tell you that they do not take shares back to pay the fee, so your Option B is not the way it works. Instead, the fee is essentially taken out of the fund's price every single day. For example, if an ETF has a fee of 0.25% per year, that annual percentage is divided up by the number of days (or business days) in the year.The resulting tiny daily percentage — in your example, about 0.00068% per day — is then automatically taken out of the fund's price. This means that when you look at a price history chart for an ETF or mutual fund, the price you are seeing is the net price already after the fee has been deducted. You do not have to recalculate anything to find the true performance; the daily deduction is already factored in, making it very easy for investors.

💸 Money Tip of the Week

☎️ Need Money Help?

The Team Clark Consumer Action Center is a free helpline that can help you navigate your money questions. Call 636-492-5275. Visit clark.com/cac for more information.

This information is provided to you as a resource for informational purposes only and is not to be viewed as investment advice or recommendations. Investing involves risk, including the possible loss of principal. There is no guarantee offered that investment return, yield, or performance will be achieved. This information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Any company names shown are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. The views and opinions expressed are for educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions. Always consult your own legal, tax, or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.

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