Unfortunately, investing isn’t risk-free. Every investment requires at least some level of risk. But some people let even the smallest whiff of risk keep them from investing at all. They’d rather stuff their money under their sofa cushions than brave the stock market’s highs and lows.

But there is something riskier than investing—and that’s not investing at all. That’s why so many 40- and 50-somethings are panicking. They don’t have a retirement investing plan, so they’re looking at retiring with no savings and depending on Social Security to get them through (don’t count on it). 

So, how do we manage the risks of investing in a way that allows your money to grow while lowering the possibility of losing it all on one wrong move? Let’s talk about it.

Every year it seems like thousands of people get caught up chasing flashy investing trends that pop up on their TikTok feed or some dark corner of Reddit. They get sucked into “investing” in things like cryptocurrency, meme stocks (Remember GameStop?), and precious metals like gold or silver—sometimes just because their friends or relatives are into it (talk about FOMO gone wrong).

Listen, running after the latest investing trend will most likely leave you with a whole lot of heartburn and empty investment accounts. A lot of these trendy investments don’t have long track records of success (if there’s any success at all) and are so complicated it would probably take a degree in macroeconomics just to wrap your head around how they work. People often jump on these trends based on spur-of-the-moment emotions instead of hard facts. It’s just not worth rolling the dice on ‘em.

On the opposite end of the risk spectrum, you have some folks who would rather play it really safe . . . stuffing their money in a jar and leaving it at that. They’d rather invest in bonds or pump money into certificates of deposit (CDs) or a plain old savings account instead of their 401(k).

But there’s just one glaring problem with that approach—inflation. Inflation is the increase in the price of goods and services over time. It’s the reason why that Big Mac from McDonald’s that cost 45 cents back in the 1960s costs more than $5 in today’s world.

You see, you need your investments to outpace the rate of inflation (which is about 2–3% per year, and way more than that in the last couple of years). What that means is the dollar you save today will be worth less when you retire in 20 or 30 years, so you’ll need more dollars in the future to afford the same things you spend money on today. If the money you set aside for retirement isn’t growing faster than the rate of inflation, your nest egg might not last very long during your retirement. And that just won’t cut it.