Everyone Counts the Return. Almost No One Counts the Anxiety

A client of mine is a surgeon. He was willing to take some risk to move towards what his family wanted.

His wife is his opposite. Fixed deposits only. She values certainty, and she values sleeping through the night.

He started investing in early 2022, which turned out to be poor timing. His portfolio fell about 15%, and it came as a series of drops, each one asking the same question again. A single clean fall would have been easier to absorb.

Should we stop? Should we change this? Did we make a mistake?

It took roughly three years to climb back to where he started.

His wife, over the same stretch, put money in fixed deposits and earned somewhere around 9% in total. No drama. No late nights. Nothing to second-guess.

You can imagine how that felt. He had done the harder thing, carried the discomfort for three years, and had less to show for it than the person who had done the easy thing.

Then 2025 delivered about 15% in a single year, and over the full period he came out ahead.

Afterwards he joked that he should have talked his wife into investing too.

It is a good line, and it also points straight at the actual problem. When markets fall we want out. When they rise we want more. The strategy stayed the same across those four years. His feelings about it changed, and they moved in exactly the wrong direction each time.

Volatility and risk are different things

These two words get used as if they mean the same thing, and almost every poor investment decision I have watched someone make traces back to that confusion.

Volatility means the value moves up and down.

For a financial plan, the risk that matters is failing to get where you were going.

They often point in opposite directions. I hear this often from senior professionals: I am low risk, so I keep my money in the bank. When I ask what they mean by risk, the answer is usually losing money. But that describes price movement, and says nothing about an outcome in your life.

Cash rarely dips. That is its whole appeal. What it does instead is lose purchasing power in a way that never shows up as a red number on a screen. If savings earn 0.5% while prices rise 3%, that is a real loss of 2.5% a year, every year, invisibly.

Here is the arithmetic that tends to land hardest. Take what you spend in a month today and carry it forward thirty years at roughly 3% inflation. If you spend four thousand a month now, the same basket of things costs about ten thousand a month by then. The identical life, at a later date. That is around a hundred and twenty thousand a year, and it is the number your retirement has to clear before you have gained anything at all.

So the honest question is: safe for what?

If you had an interview in Jurong and you were standing in Changi, walking would be the option with no engine, no speed and no chance of a collision. It would also guarantee you missed the interview. That is a different kind of risk, and it is the kind that does not announce itself.

Why a smaller number can beat a bigger one

A senior client once sent his friend to see me, a seasoned stock picker who had averaged around 10% a year for decades. He was curious about diversified portfolios, which carry a considerably more modest expectation. We agreed there was no sense in him changing anything. Ten beats five.

A few weeks later he rang and said he had made a calculation error, and wanted to meet.

He opened with a question. If you had a hundred thousand dollars and found a company you really liked, how much would you put in?

Maybe 20%, I said. You never know.

He nodded. So twenty thousand at 10% is two thousand dollars.

Then he pointed at my side of the table. Your client puts the whole hundred thousand into something diversified at a lower rate, and earns more than that in absolute dollars.

I pushed back, because the comparison is unfair. You cannot measure twenty thousand against a hundred thousand.

He smiled, and then said the thing I have repeated to clients ever since.

When you track your results in a spreadsheet, do you include the cash you did not deploy while waiting for the next idea? Do you record the weeks or months when eighty thousand sat idle?

Few people do. We record the buys and the sells, and skip the gaps in between.

And when you sell a company, does an equally good one appear the same afternoon? Rarely. Good opportunities arrive when they arrive, and the money waits.

That waiting is a real cost, and it never appears in the headline figure. His 10% was genuine, but it applied to a slice of his money, some of the time. A lower rate applied to all of the money, all of the time, compounds without interruption.

It is one of the few places in personal finance where the smaller-sounding number is the larger one, and almost nobody checks.

What this has to do with the surgeon

Both of these threads meet at the same place: your outcome depends less on the quality of the strategy than on whether you stay in it.

A diversified position does more than smooth the lines on a chart. It lets you leave the money where it is during a year like 2022 without needing to do something for relief. That benefit is psychological, and it is worth more than return-chasing ever earns.

Because at the time, the failure looks like a reasonable response to real discomfort.

Missing a bus is a useful comparison. When you miss one you can chase it down the road, or you can wait properly for the next. People lose money when they start running, even with a sound plan, because the feeling gets loud enough that they need it to stop.

And the last few years have made that harder rather than easier. Geopolitics, conflict, interest rate uncertainty and one hype cycle after another mean markets lurch now. Investors feel that volatility constantly, on a phone in their pocket.

The practical version

None of this argues for ignoring your portfolio, and none of it argues that cash is bad.

Cash is excellent at what cash is for. Six to twelve months of expenses, and anything you need in the near term, belong there.

The rest is a matter of matching money to the date it is needed. Money required in two to five years wants steadier instruments. Money not needed for ten, twenty or thirty years needs to at least keep pace with prices, because that is the money whose job is to buy a life at a much higher cost than today’s.

And if the strategy made sense when you chose it, and nothing about your circumstances has actually changed, a bad year is the price of the thing working, being charged in advance.

Stay alert. Review when something changes. Just be honest about whether what changed was your situation, or only how the last few months felt.

The figures in this article are approximate. Client results describe individual past experience, and the inflation and interest rates are illustrative. Past performance is not a reliable indicator of future returns.