The Risk You Don’t See

From time to time, someone will tell me, “I just don’t want to lose it. At least with it in the bank, I know it’ll be there.”

What they’re describing is a feeling: stability, predictability, and the absence of surprises. That feeling matters.

But it’s worth slowing down and asking what “safe” really means in that context.

Most of the time, what people mean by safe is that the value doesn’t move around. It won’t surprise them when they log in. It won’t swing up and down from month to month. It feels solid and predictable.

And I understand the appeal. After years when markets have felt noisy, predictability can feel like control.

But safety doesn’t always mean there is no risk. More often, it means the risks involved are less visible, and since they are less visible, they feel easier to live with.

Take CD’s.

When you deposit money into one, the bank doesn’t just place the money in a vault and leave it untouched. Instead, they lend it out in the form of mortgages, car loans, business loans. That’s how they generate the interest they pay you.

There’s nothing wrong with that. This is how banking works.

It’s simply a reminder that interest and returns don’t appear out of thin air. Risk is being taken somewhere in the system. In a CD, most of that risk sits on the bank’s balance sheet. In a diversified portfolio, it shows up more directly in your balance sheet. And that experience feels very different.

With traditional investments such as stocks and bonds, values fluctuate. You see the movement. Some days are positive. Some days are not. The changes are visible, and that visibility can feel uncomfortable at times.

With a CD, the balance appears steady. It grows at the agreed-upon rate. There are no daily swings to react to. But even steady accounts carry tradeoffs over time. Inflation changes purchasing power. Interest rates shift. Eventually, you’re faced with the question of what to do with it next.

One type of risk demands your attention. The other can sit quietly in the background for years, which makes it easy to overlook.

None of this means that CDs are bad. They serve some very important purposes. Liquidity. Flexibility. Peace of mind. In fact, having meaningful cash reserves often allows someone to invest more aggressively elsewhere. When people know they have money set aside, they’re typically more comfortable allowing other portions of their portfolio to do what markets naturally do over time.

Cash can be stabilizing.

But like most financial tools, its usefulness depends on proportion and purpose.

A small allocation to cash for emergencies or near-term spending needs makes sense. A moderate allocation to provide emotional comfort can also make sense. Where the conversation becomes more nuanced is when large sums accumulate simply because they feel steady, rather than because they are tied to a defined need.

Over longer stretches of time, relying too much on certainty can come with its own set of tradeoffs. Inflation gradually reduces purchasing power. Compounding gets delayed. Growth that could have occurred simply doesn’t. None of that feels dramatic in the moment. It unfolds slowly, rarely feels urgent and is easy to miss.

Markets make noise. Volatility demands attention. A portfolio that moves up and down forces you to think about risk regularly.

Cash doesn’t do that. It just sits there.

But sitting still is not the same as standing still. The world keeps moving. Prices change. Opportunities change. Time continues to pass.

The goal isn’t to eliminate risk. That’s not realistic. Every financial decision involves tradeoffs. The real objective is to understand which risks you’re accepting; and whether those risks align with what those dollars are meant to accomplish.

If you’re comfortable locking money up for four or five years at a fixed rate, that tells me something important. It suggests those dollars are not needed immediately. And once that’s true, it opens up a broader conversation about the role of those funds.

Are they there for short-term stability?

Future spending?

Legacy planning?

Or simply because moving them feels uncomfortable?

There’s no universal right answer. Different tools serve different jobs. What matters is that the allocation reflects intention rather than simply what feels comfortable.

There’s a meaningful difference between choosing certainty on purpose and drifting into it over time. Often, the risk that deserves the most attention isn’t the one that fluctuates on a statement.

It’s the one you don’t immediately see.