Welcome to Fix-It Friday, the podcast segment that simplifies financial strategies to help you make smarter decisions. Hosted by Jonathan Blau, CEO of Fusion Family Wealth, this episode explores how investors misunderstand risk by focusing on volatility instead of inflation. Listeners will learn how behavioral finance biases like loss aversion and risk misperception influence investment decisions and gain insight into why avoiding short-term discomfort can lead to long-term financial failure. By the end of the episode, you’ll understand how to make smarter financial choices and protect your wealth.
What You’ll Learn:
The difference between volatility and inflation and why it matters
How behavioral finance biases cause investors to fear the wrong risks
Why smooth returns from cash and bonds can quietly destroy wealth
Want to make smarter financial decisions grounded in clarity and confidence? Subscribe and share the Crazy Wealthy Podcast. To learn more about Fusion Family Wealth’s evidence-based investment strategies, visitwww.fusionfamilywealth.com and request our current disclosure brochure.
Key Timestamps:
00:00 — Introduction and podcast disclaimer
02:10 — Volatility explained and why it is temporary
05:45 — Inflation as the silent erosion of purchasing power
10:30 — Closing: Redefining risk and protecting your future
Key Takeaways:
Volatility is temporary, but inflation permanently reduces purchasing power
Behavioral finance biases lead investors to avoid discomfort instead of real risk
True risk is failing to maintain your lifestyle, not short-term market swings
About the Host:
Jonathan Blau is the President and CEO of Fusion Family Wealth, a fiduciary wealth management firm he founded in 2013 to help families achieve clarity, confidence, and purpose with their money. With a deep focus on behavioral finance, Jonathan teaches investors how to recognize emotional biases and make evidence-based decisions that support long-term success. A sought-after speaker in wealth management, Jonathan previously held senior roles in tax and estate planning at Arthur Andersen. He holds a BS in Finance, an MS in Taxation, and an MBA in Accounting. Based on Long Island, Jonathan is active in the local business community, supports organizations such as the Middle Market Alliance and Sunrise Day Camp, and enjoys boating with his family.
A copy of Fusion's current written disclosure brochure discussing our advisory [00:00:15] services and fees is available upon request or at www.fusionfamilywealth.com.
Jonathan Blau: Hello and welcome to another episode of the Fix It Friday edition of the Crazy Wealthy Podcast. Today I'm gonna talk about two of the major risks that are often.
Talked about by [:
And if they don't realign their perspective. On what safety actually is versus what it isn't. It could mean the difference between long-term investment success and failure.[00:01:00]
Join Jonathan as he seeks to [:
And more to share fresh [00:01:30] perspectives on making sound decisions that maximize your wealth. And now here's your host.
the main difference between [:
Even though many investors kind of view volatility as sharp downward movements, that's not what it means. It's up and downward movements that could be sharp around the average. [00:02:00] And the key about volatility is those movements are temporary. So if we look at stock returns over the last a hundred years, the premium return has been 10% a year.
% a year. So stock [:
So declines are temporary and the premium returns are permanent. So as it relates to volatility, that's a very important relationship to keep in mind when we talk about the second risk. [00:02:45] Which is inflation as compared to volatility. Inflation is, is a very dangerous risk because it's a silent killer. It creeps up on you.
s inflation, we don't see it [:
In my view, I look at volatility as a manufactured or illusory risk created by our industry. It's how they sell products, it's how they create fear, and in many cases, the industry believes that volatility is a risk for various [00:03:30] reasons, not the least of which is a fellow who won the Nobel Prize in the fifties was looking to compare in his model, ways to choose one portfolio versus another.
ed you have to compare risk. [:
And [00:04:00] the problem is, I believe that's a mis definition of risk like any other thing, when you mist, define risk, or anything else, the solution that you get because you're mis defining the problem is the wrong one and the solution. [00:04:15] When you wanna mute volatility or up and down movements, is to put more things like cash and bonds in the portfolio.
years, I only get a million. [:
Again, the industry solution to volatility [00:04:45] gives investors the real effective problem of killing, purchasing power by putting investments into the portfolio that are smooth. Smooth does not equal safe. That's one of the key messages that I'm gonna want everyone to take [00:05:00] away from today's podcast. So investors misled by the wealth management industry and the financial media spend far too much time trying to avoid volatility and barely any time considering that they need to [00:05:15] fight inflation.
ighest probability that they [:
Volatility in the short run moves prices. They zig and they zag. They go up and down, and the [00:05:45] catastrophes, media headlines make. Markets feel very scary in the short run, and it's okay to feel fear again. It's just not okay to reflect that fear by changing your portfolio investments that were suited for your long-term goals in [00:06:00] order to make yourself feel more comfortable in the short run because you'll do it at the expense of running out of money.
on on the other hand, is the [:
While volatility is [00:06:30] temporary, inflation is permanent. If you have to choose between controlling two risks, you want to control the one that permanently destroys wealth, not that temporarily changes the number of dollars in the portfolio when you look on your statement loss. Purchasing [00:06:45] power never returns.
and choose wisely which one [:
What that means in an average retirement of 30 years, the investor [00:07:15] would lose half of the purchasing power of every dollar. So it means that a dollar today would buy about 50 cents worth of goods and services in retirement. Put another way. In retirement, after 30 years, you would need two and a half dollars to buy what a dollar bought [00:07:30] today.
estyle until they run out of [:
So the wealth management industry teaches most investors to fear the wrong thing. They're taught that the greatest risk to their wealth, they're seeing their accounts [00:08:00] temporarily fluctuate in a number of dollars. So what do they do? They shift to perceived safety, hold more cash, buy more bonds, which again, uh, feed the disease of money, which is inflation.
look for smoother rides. The [:
Inflation is invisible. You only notice it when life gets more expensive, and by then the damage is already undone and cannot be undone. That's why investors overreact to [00:08:45] volatility and underreact to inflation. It's a very classic behavioral mistake, and what we need to do to fix this problem is redefine volatility, redefine risk, not volatility.
isk. Risk is not volatility. [:
It's a medium of exchange. If I perfectly preserve a million dollars worth of a hundred dollars bills, I haven't preserved my money because that million dollars in 30 years will need two and a half million to buy what it bought today. Risk is freezing your money and assets [00:09:30] that can't keep up with rising costs over the long term.
elf to fail to maintain your [:
I hope you enjoyed today's fix at Friday, and you can get us on all your favorite podcast venues, fusion family wealth.com and crazy wealthy podcast.com.[00:10:15]
til then, stay crazy wealthy.[:
Disclaimer: The previous podcast by Fusion Family Wealth, LLC Fusion was intended for general information purposes only. No portion of the podcast serves as the receipt of or is a substitute for personalized investment advice from Fusion or any other investment professional of your [00:10:45] choosing. Different types of investments involve varying degrees of risk, and it should not be assumed that future performance of any specific investment or investment strategy or any non-investment related or planning services, discussion or content will be profitable.
certain level of results or [:
Fusion is neither a law firm nor accounting firm, and no portion of its services should be construed as legal or accounting advice. No portion of the video content should be construed by a client or perspective client as a guaranteed that he or she will experience a certain level of results if Fusion is engaged or continues to be engaged.
