For some, investing feels like a high-stakes gamble, which makes them opt to keep their money in “safe” places. However, what they don’t realize is that not investing is, in itself, a risky move.  

Inflation erodes the value of cash over time and by avoiding the market, individuals miss out on the power of compounding returns, which can grow considerably in the long run.

Take, for example, the case of a 29-year-old Redditor who recently sought advice on managing his money. Sitting on $150,000 in cash and $65,000 401(k), he described himself as “very risk-averse” and reluctant to invest because of fears of losing the money.

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“I make $100,000 per year in a medium-cost-of-living area. Single, no kids, no debt, and I own no property besides my car which is probably worth about $7,000. I'm also a little worried about losing my job at the moment, my company announced mass layoffs in other departments, so far I'm safe but who knows what'll happen next,” the poster wrote.

Concerned about these two things–losing his money and job–the Redditor asked for advice in the r/FinancialPlanning community. And Reddit has delivered.

Risk-Averse Redditor Seeks Safe Investments for His $150,000 Cash and $65,000 401(k). Reddit Weights In

Start with a Roth IRA and Low-Cost Index Funds

One of the most recommended steps was to open a Roth IRA and invest in low-cost funds.

“The best thing you can do is open a Roth IRA. Deposit $7,000 for 2024 (which you can do until tax day), then deposit another $7,000 for 2025. You can do this on the same day. Invest these deposits in [Vanguard S&P 500 ETF VOO]. Do the same every January 2,” a comment reads.

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One Reddit user advised the poster to keep six months of expenses in a high-yield savings account and invest the rest because not investing loses him more money.

“You are losing money but not having most of that $150,000 in the stock market. Keep 6 months of expenses in a [high-yield savings account] and put the rest in the market. Maybe the S&P 500? Don't look at it until you are about 50. Ride the waves. If not, you will be kicking yourself when you are 70,” he said.

A Redditor suggests the poster diversify his investments across different asset classes to reduce risk while still seeing some growth.

“I would do the following: max out a 2024 & 2025 Roth IRA. Use a Bogleheads approach (less volatile!) with a total U.S. stock market index fund ([Vanguard Total Stock Market ETF VTI] or equivalent), an international stock market fund ([Vanguard Total International Stock ETF VXUS] or equivalent), and some bonds ([Vanguard Total Bond Market ETF BND] or equivalent). Then don’t look at the balances until next year. Then start contributing enough on your 401(k) to max it out, or as close to it as you can get,” the commenter wrote.

“You can also invest in VOO or other funds in a brokerage account which is not limited to $7,000 per year,” another user suggested.

Recommending a low-cost ETF since it grows better than a high-yield savings account and is available to cash out in case of emergencies, this comment advised the poster to reinvest the annual dividends back.

“Mild risk would be to take a portion of your paycheck and invest in a low-cost ETF like [Vanguard High Dividend Yield ETF VYM] at Vanguard or similar. I'd be very disciplined and reinvest the annual dividends right back into the fund. It will grow better than a [high-yield savings account] and it is only slightly more risky. An ETF will provide growth (usually, hopefully, better than simple interest rates) and be readily available when or if needed,” the comment said.

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Not Investing is a Risk in Itself

Several commenters pointed out the fact that not investing the money is riskier than investing it in the wrong assets.

“Not investing is also taking a risk, to be clear. At your age, you're losing hundreds of thousands in future gains by being too conservative now. Keep enough in your [high-yield saving account] to sleep at night, and invest the rest in well-diversified funds. There are lots of ways to mitigate risk, and if you don't trust yourself to make those choices, hire a professional you trust,” a Redditor wrote.

Another user explained in a comment why and how the poster is losing money by not investing.

“You say you’re risk-averse, but you’re actually taking on two significant risks. First, you risk insufficient growth. If you don’t invest the majority of your assets, you’ll probably never have enough to retire and you will have missed out on millions of dollars of growth. Second, you risk losing purchasing power due to inflation. [High-yield saving account] yields are currently a little above inflation, but in the past have been below inflation for long stretches. These two risks work against you in a major way,” the Redditor explained.

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