What 'Playing It Safe' With Your Money Looks Like Right Now
There are some areas of life where playing it safe makes sense, like working with power tools. Managing your money in an uncertain economy also calls for a cautious approach. But financial safety isn't as simple as avoiding every risk.
To get a clearer sense of what playing it safe looks like today, as prices remain high, inflation persists and the job market feels sluggish, MoneyLion spoke with several experts. While they understand why consumers are craving stability, they also warned that some "safe" financial habits could limit long-term growth.
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People Are Holding On to More Cash
One "safe move" that Joseph Ortiz, a financial advisor and certified exit planning advisor with Edward Jones, has observed is people holding onto more cash.
More consumers seem interested in maintaining a larger cash buffer, limiting unnecessary risks, cutting costs and avoiding fees. Ortiz said these decisions can be wise, but people still need to balance building cash reserves with opportunities to grow their money over the long term.
"While these moves can feel prudent, they aren't always optimal if they sacrifice long-term value — like skipping professional guidance or growth opportunities that may outweigh short-term savings," he said.
People Are Looking to Financial Products That Protect Their Assets
Jarad Stolz, vice president of insurance sales and associate chief underwriter at Diversified Insurance Brokers Inc., said he has noticed more consumers turning to financial products they believe can protect their assets from a major market downturn.
"Playing it safe isn't always about stuffing money under your mattress," he said. "Consumers are protecting their nest eggs, or at least a portion of them, with products like annuities that offer guarantees, safe growth, protection and liquidity, while keeping another portion invested for higher growth and a little more risk."
Additionally, Stolz said he has seen what he called "an uptick in CDs, high-yield savings accounts and Treasurys." He noted that while these financial vehicles can reduce risk, their returns might not always keep pace with inflation.
People Aren't Always Prioritizing Retirement Savings
In some cases, "playing it safe" may not be in your long-term financial best interest.
Cody Schuiteboer, president and CEO of Best Interest Financial, said too many people are deprioritizing retirement savings in favor of other financial goals, such as building an emergency fund, paying down debt or covering a mortgage.
"Reducing retirement contributions at the cost of paying off a 3.25% mortgage ... will cost you far too much in lost gains over time," Schuiteboer said.
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He added that while many Americans express anxiety about their income after retirement, he isn't seeing actions align with those concerns.
"Many of my clients are choosing to shift to conservative allocation options inside of their 401(k) accounts, which tend to yield between 4% and 5%," Schuiteboer said. "This would be a wise choice if not for one detail: Moving to a conservative allocation at age 45 locks in years of underperforming returns and reduces future compound growth."
Schuiteboer pointed to the old investing adage that time in the market beats timing the market.
The Bottom Line
Playing it safe with your money doesn't have to mean avoiding risk altogether. The experts MoneyLion spoke with suggest that the goal is to find the right balance between protecting what you've built and giving your money room to grow. That's a difficult line to walk, but one that could pay off over time.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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