Why don’t we just all drive tanks?

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Safety is priority #1 when on the road but if it was our sole concern then why wouldn’t we all just drive tanks and ensure a safe ride every time? Reason being, there is always a trade-off between risk and reward in all aspects of life. In our example, driving a tank would provide a safe ride, with the trade off being: longer trips, cost a wallet-full for gas and finding parking would be a nightmare.

Obviously we are not going to purchase a tank just to be safe but I can’t help but think that people who ask me to put all their money into GICs, so they don’t need to worry about the market, share the same mentality. It is a solution, but similarly to how the tank only addresses the issue of safety, GIC investors would be trading off the ability to keep up with inflation through stock market growth. This is why you need a balanced mix of assets.

Simply put, I would love to own a Ferrari. It would be fun, but it is expensive (trade-off) and my family of 4 (plus dog) would be in no way happy about the decision (trade-off). Okay, my 9 year old son may be happy…

What we find is that most people will drive a vehicle that has a balance to fit their lifestyle. If you have a family with a dog, like myself, you are going to choose a minivan over a Ferrari. If you are young, single and have a great income, then perhaps a sports car is for you. There is not one vehicle that will be appropriate for every individual’s situation just the same way that there is not one asset mix that will be suitable for every individual’s tolerance for risk.

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