The Biggest Risk Is Not Taking Any
— Mark Zuckerberg

Back in January 1995, the Green Bay Packers lost to the Dallas Cowboys in a hard-fought Divisional Round playoff game in the old Texas Stadium. I didn’t know it at the time, but that game would be my last in a Packers uniform. One month later, I made what I considered to be a risky move: I left a Super Bowl contender to join the NFL’s newest expansion franchise, the Jacksonville Jaguars.

Over the next few months, I found myself second-guessing my decision as I suffered through Coach Tom Coughlin’s intense offseason workouts, a brutal six-week training camp, and only four victories in our first season. But over the next few years, I flourished as a player and our team made playoff appearances in each of the next four seasons, including two AFC Championship Games. In hindsight, my “risky” decision to join the Jaguars turned out to be the best—and safest—decision of my NFL career.

Ironically, investing works much the same way. Sometimes the move that feels risky turns out to be the one that gives you the best protection. For example, while I was chasing quarterbacks, my father Ken was preparing to retire after a long and successful career as an account executive with Minnesota Mining and Manufacturing. He hoped his decades of frugal living, disciplined saving, and intelligent investing would allow him to enjoy his golden years with my Mom.

Like every retiree, Dad’s biggest decision was how to invest his nest egg to ensure it would support him and Mom throughout their retirement years. Although he had built his portfolio by methodically investing a portion of every paycheck into equities over decades, the financial advisor he was working with at the time convinced him to convert it almost entirely to bonds. On paper, this looked like a safe move since high quality bonds were paying generous yields of more than 6%. If a bond portfolio could generate enough interest to fund my parent’s living expenses, why assume the risk of the stock market? This argument resonated with my father’s conservative nature, as it does with many retirees.

Unfortunately, the real threat to a long, happy, and dignified retirement is not temporary market volatility but the inevitable erosion of purchasing power. Over the ensuing 30 years, even the historically modest 2.5% annual increase in the Consumer Price Index would more than double the cost of living. So even though their seemingly “safe” bond portfolio may have generated enough interest to cover their expenses during the first few years of retirement, it would just be a matter of time before their perpetually rising expenses would have exceeded their bonds’ permanently fixed interest payments.

Unlike bonds, as Great Companies grow by launching new products, reaching new customers, and expanding into new markets, they tend to increase their dividend payments at a rate that exceeds inflation. For example, while the cost of living has more than doubled over the past 30 years, the dividends paid by the S&P 500 index have nearly tripled while its value has increased more than tenfold.

When my NFL playing days were over, I founded DEM on the simple premise that equities are the safest and surest vehicle for not only building wealth, but defending it against the ravages of inflation throughout one’s lifetime. I take great pride knowing that my parents were able to play golf, travel, and visit their children and grandchildren as often as they liked during their retirement. And when Dad passed a few years ago, he took great pride knowing that Mom would be able to continue doing so, regardless of how long she lives. My parents didn’t just survive retirement; they thrived in it.

The greatest risk retirees face is not short‑term market volatility. It is outliving their money. Equities are the only asset class capable of providing a perpetually rising income stream that is impossible to outlive. So rather than avoid volatility in retirement, we Spartans confidently embrace it as the very source of our inflation-beating returns. Much like my decision to sign with the Jacksonville Jaguars, the bold move is often the safest one.

Go Jags!