“I just want to play it safe.”
It’s one of the most common things people say when talking about their money — particularly as they approach retirement. Usually, “safe” means cash, bank accounts or term deposits.
While these options feel stable and reassuring, they often create a different kind of risk — one that doesn’t show up on your statement, but quietly undermines your financial security over time.
A Real‑World Example of Inflation at Work
In the early 1990s, a widowed woman received a $130,000 superannuation payout after her husband passed away. At the time, this was a significant amount of money. The average home in Toowoomba cost around $65,000 — meaning she could have bought two homes outright.
Concerned about economic uncertainty, she placed most of the money into term deposits. Interest rates were high, and in the first year she earned around $14,000 — close to two‑thirds of an average full‑time salary at the time.
It felt like a sensible, low‑risk decision.
What Happened Over the Long Term
Fast forward 35 years.
That same $100,000 now generates less than $5,000 per year in interest. Over the same period, everyday living costs have more than doubled, bread prices have more than tripled, and the average Toowoomba home is now worth around $670,000.
Her income fell dramatically while her expenses rose — not because of poor decisions in the moment, but because inflation quietly eroded her purchasing power.
This is the hidden risk of “safe” investments.
Understanding the Different Types of Risk
Market volatility risk is obvious and uncomfortable. Inflation risk is quiet and persistent and un-noticed.
Avoiding all risk isn’t possible. The real question is which risks you choose to manage.
Assets such as shares and property experience ups and downs, but they also tend to grow and adapt over time. Businesses increase profits and dividends. Rents rise gradually. These features help protect against inflation in ways cash simply cannot.
Diversification is key. Different assets play different roles — stability, income, growth and long‑term purchasing power.
True financial safety isn’t about avoiding uncomfortable market movements. It’s about protecting your lifestyle over decades.
While cash and term deposits feel safe, relying on them too heavily can expose you to significant inflation risk. A balanced strategy — one that accepts some short‑term uncertainty — often provides far greater long‑term security.
Contact us to chat about how you can take a step toward comprehensive financial security that spans generations.
