Risks
title: I don't want to take any risks. I don't want to lose my principle. description: [AFW S.12.13] Securities Objection #13 published: true date: 2026-06-30T08:11:58.860Z tags: editor: markdown dateCreated: 2021-11-10T02:00:03.410Z
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“Risk is measured as the probability that you won’t meet your financial goal. Investing should have the exclusive objective of minimizing this risk.” ―Nick Murray
This script is based on a dialog from The Excellent Investment Advisor book on page 162 by Nick Murray (hardcover).
Prospect: I don't want to take any risks. Advisor: First, a moment of stunned silence on your part - just enough to communicate non-verbally that this is an almost alien concept to you. Then, reach in your pocket and take out a laminated card with two first-class US postage stamps, one from the current year and one from 25 years earlier. Look your prospect in the eye, not saying anything. Then glance down at the stamps, which pulls their eyes down to the stamps, as well. Then move the card gently a fraction of an inch closer to your prospects and say, "How are you defining risk?" 5 second silence.
Prospect: Losing my money.
Advisor: "Losing your money is a risk, but it can never be the risk. The greatest financial risk you will face in your lifetime is the extinction of your purchasing power while you're still alive. Your main problem at retirement isn't losing your money, but outliving it. If you live to age 74 you don't want your money to run out at age 69, do you (prospect)?" Prospect: No. Advisor: "For example, 25 years ago a first-class postage stamp cost 13 cents, today it's 34 cents, that's a 262% increase! (Prospect), have your savings grown 262% since 1977?" Prospect: No. Advisor: "So, that means that if you had saved 13 cents in a fixed-rate savings account or CD twenty-five years ago, it wouldn't' be enough to buy a first-class postage stamp today, would it?" Prospect: No. Advisor: "So, what you would have done is preserved your 13 cents, but you would have lost the value of those 13 cents. And, that's exactly what's going to happen to your money in the next 25 years if you don't make the smart choice. You see, "risk" isn't losing a certain number of paper dollars, but losing the purchasing power of those dollars. And the only way to avoid that risk is to grow your money faster than it is losing value, and that is by investing in companies. Do you see that?"