One of the biggest misconceptions in investing is that the greatest risk is losing money in the market.

A bad investment. A market correction. A recession. Headlines that make you question whether you should “wait things out.”

But historically, one of the most damaging financial decisions hasn’t necessarily been a bad investment decision — it’s been choosing not to invest at all.

The Quiet Risk Most People Don’t Think About

In the late 1920s, $100 could cover a month’s rent in many parts of the country with money left over for groceries and daily expenses. Today, that same $100 may cover a dinner out or a quick trip to the grocery store.

That’s inflation at work.

It doesn’t usually create panic the way stock market volatility does. There are no breaking news alerts about the gradual erosion of purchasing power. But over time, inflation quietly impacts every dollar that isn’t working for you.

And that’s why long-term investing matters.

Three Different Outcomes From the Same Starting Point

The historical comparison paints a powerful picture. Imagine placing $100 into one of three places back in 1928:

• Cash
• U.S. government bonds
• The broad U.S. stock market

Here’s what happened over time:

Cash

The value stayed at $100 nominally, but its purchasing power steadily declined over decades due to inflation. What felt “safe” in the short term lost meaningful value in the long run.

U.S. Government Bonds

With average returns around 4.5% annually, that same $100 grew to more than $7,700. Not flashy, but a meaningful step ahead of inflation and an important component of many balanced portfolios.

The Stock Market

At roughly 10% annualized returns, $100 grew to nearly $1.2 million over time — despite living through the Great Depression, wars, recessions, the tech bubble, and the 2008 financial crisis.

That growth didn’t happen because markets were smooth.

It happened because investors stayed invested through periods that felt deeply uncomfortable at the time.

Volatility Often Creates the Biggest Behavioral Mistakes

One of the conversations we have most often with clients during volatile markets is around the temptation to “do something” when uncertainty increases.

And one piece we frequently review with clients — especially as volatility creeps back into the market — comes from J.P. Morgan Asset Management’s Guide to the Markets.

The chart illustrates the impact of missing just a handful of the market’s best recovery days over a 20-year period:

• A fully invested $10,000 portfolio grew to more than $80,000
• Missing just the 10 best market days cut that result by more than half
• Missing the 30 best days reduced long-term growth dramatically further

What’s even more important is when many of those best days occurred.

According to the data, six of the market’s 10 best days happened within two weeks of the market’s worst days.

In other words, the periods that feel the most uncomfortable emotionally are often the same periods where long-term investors are rewarded for staying disciplined.

That’s why trying to perfectly time exits and re-entries into the market can become so difficult in practice. The recovery often begins before investors feel confident again.

The Goal Isn’t Perfection — It’s Participation

This doesn’t mean investors should ignore risk or put everything into stocks.

Good financial planning still requires thoughtful diversification, tax awareness, proper cash reserves, and an investment strategy aligned with your goals and timeline.

But one of the most important long-term investing principles remains surprisingly simple:

Consistency matters more than prediction.

The investors who historically benefited the most weren’t the ones who perfectly timed every market cycle. They were often the ones who stayed focused on the bigger picture, avoided emotional decisions, and allowed compounding to do its work over time.

At Totemic, we believe part of our role is helping clients navigate not only the technical side of investing, but also the emotional side — especially during periods when headlines and market volatility create uncertainty.

Because while volatility is temporary, abandoning a long-term plan at the wrong time can have lasting consequences.

If you’d like to revisit how your portfolio, retirement plan, or investment strategy aligns with your long-term goals, we’d be happy to have a conversation.

Sources

1. Bureau of Labor Statistics. Historical inflation and purchasing power data.
2. Aswath Damodaran, NYU Stern School of Business. Historical Returns on Stocks, Bonds, Real Estate and Gold dataset. Stock returns based on the S&P 500 including dividends; bond returns based on U.S. Treasury Bonds.
3. J.P. Morgan Asset Management. Guide to the Markets and “Impact of Being Out of the Market” analysis, using S&P 500 Total Return Index data through December 31, 2025.