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Investment Safety: Assessing Risk

Understanding Investment Safety: How Safe is Your Money? Recent news about bank failures and stock market volatility has raised concerns about the safety of investments, leading many people to wonder, “How secure is my money?”

The truth is that there’s no such thing as a 100% safe investment. Every investment carries some level of risk.

However, understanding the different safety levels in various types of investments can help you make more informed decisions and gain a better sense of financial security.

Let’s start with banks. We categorize bank accounts as “yellow money” – they offer safety, guarantees, and easy accessibility when needed. However, recent bank failures have raised doubts about the safety of bank deposits.

The FDIC (Federal Deposit Insurance Corporation) typically insures deposits up to a certain amount, currently $250,000 per account type, but this insurance does not guarantee immediate access to your money.

If a bank were to fail and the FDIC had to make a payout, it could take weeks or even months to receive your money.

Then, there is the question of the strength of the FDIC, which has about 125 Billion in reserves to insure around 9 trillion in deposits. You can read more about this in our recent FDIC memo.

Bank accounts are generally safe but not entirely risk-free. Stocks, on the other hand, are riskier than bank accounts due to market volatility. They can offer higher returns but also entail the potential for rapid losses.

The level of risk in a portfolio depends on various factors, including risk management strategies like hedging. Active risk management can help reduce exposure to risk. For instance, this year, our portfolio management team is focusing on secure, well-established companies capable of withstanding economic downturns.

While bonds are often seen as safer than stocks, the events of 2022 showed that they carry risks too. Bond prices can fluctuate due to changes in interest rates and other factors, leading to potential losses.

Additionally, not all bonds are created equal – some are riskier than others.

Individual bonds are tied to the strength of the issuing company, while bond funds lack guarantees and can suffer losses due to interest rate changes.

Fixed annuities and fixed indexed annuities are typically considered safe since insurance companies must maintain reserves for policyholder obligations. Variable annuities, however, carry market risk.

While annuities do not have FDIC insurance, they have other levels of protection depending on the specific policy and the state in which it is issued.

Choose a top-rated insurance company for investment protection. Firms specializing in investments and life insurance offer more stability, as they aren’t vulnerable to natural disasters like those insuring property and casualty risks.

To learn more about the safety of insurance, download our free whitepaper on this topic here.

Understanding Investment Safety: How Safe is Your Money? Investing in gold and silver safeguards wealth during uncertainty. They retain value, act as stable currency, and guard against inflation and market downturns. Be cautious of the unregulated metals market with high markups, counterfeit metals, and overpriced coins. Our experts ensure informed, cost-effective purchases. Questions? Contact us.

The key to safety is smart diversification, not just in stocks and bonds, but also in the colors of money using all the strategies and investment vehicles mentioned above.


If you want to know just how safe (or unsafe) your portfolio is, just give us a call!

We serve clients in Mineral Point WI, Dodgeville WI, Platteville WI, Lancaster WI, Fennimore WI, Boscobel WI, Richland Center WI, Muscoda WI, Spring Green WI, Mazomanie WI, Sauk City WI, Middleton WI, Madison WI, Fitchburg WI, Verona WI, Mount Horeb WI, Barneveld WI, New Glarus WI, Monroe WI, Belleville WI, Oregon WI, Stoughton WI, Darlington WI, Cuba City WI, Hazel Green WI, Belmont WI, Dubuque IA, Freeport IA

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