By Steve Tepper, CFP®, MBA

It is impossible to separate investing and risk. Whether you choose stocks, bonds, mutual funds, annuities, alternatives like gold and oil, or just a money market account, you run the risk of loss.

Seems like the safest choice, if your greatest concern is safety, would be to squirrel away cash. Unfortunately, aside from the same inflation risk as CDs and bank savings accounts that will make your cash worth less over time, the “stuff it in a mattress” investment method carries its own unique hazard: The Goodwill Catastrophe.

A story recently hit the wires about a woman in Conyers, GA, who packed a bunch of items in a box for donation to Goodwill. Among those items was an innocuous-looking Mickey Mouse coffee mug. When her son returned home and couldn’t find the mug, he had multiple reasons to lament the loss of his childhood possession. He had stashed the proceeds from the sale of his car, about $6,500, in the mug.

To date, the mug has not been recovered, having already been sold to the world’s luckiest coffee drinker.

As horrifying a scenario as this is, it is not unique or even that unusual. In 2011, an 80-year-old man donated a suit to a Goodwill store in Illinois, forgetting he had sewn $13,000, his life savings, into the lining of the jacket. In an interview, Dana Engelbert, a spokeswoman for the store, said it is surprisingly common for people to donate items with forgotten cash inside. Sometimes people return to the store trying to retrieve those items, and other times good-hearted customers return cash found in wallets, purses, or clothes they purchased there.

But the ultimate money-in-the-mattress disaster has to be this story of, well, money in a mattress: In 2009, an Israeli woman treated her mother to a new bed, disposing of the old one at the curb. When her mother screamed at the switch, she learned mom had stashed about $1 million in the discarded mattress.

By then, the trash had been picked up, and a rigorous search of local dumps and landfills proved fruitless. Her mother said she hid the money in the mattress following “traumatic experiences with banks.”

Yeah, I hate those $25 bounced-check fees too. But in retrospect, maybe whatever happened at the bank wasn’t quite as traumatic as desperately shoveling through tons of garbage and failing to recover your life savings.

There is no such thing as risk-free investing. But in my experience, few investment strategies carry as high a risk of complete loss as not investing at all, stuffing the money away in your clothes or mattress or burying it in a tin in the backyard. Investing in capital markets can be a scary ride at times, to be sure. A dollar invested in U.S. small company stocks in 1929 fell to a value of $0.11 by 1932. Eleven cents! That’s about as bad a loss as you can get without a total loss, right? But it isn’t a total loss, and in one very important way, it isn’t close to a total loss.

Let’s say I, or maybe to be more accurate my grandparents, invested $100 in risky small companies in 1929, while your grandfolks put the same amount in a mattress. Three years later the famed Boston Mattress Thief¹ burgles them, and the bed and money are lost. Your family is left with nothing, while mine has $11. That would make both our families, well, poor.

But another three years down the line, assuming they kept that $11 invested, my grandparents have their $100 back, while yours still have zero. By 1950, the $100 has grown to $1,000. That zero has grown to still zero. $1,000 would grow to $10,000 by 1982, and $100,000 by 2003, just in time to be passed down to their handsome and charming grandson. The zero would be worth zero and then ultimately would have a value of zero, and you’re asking me if you can crash on my couch.

History has shown there is no market loss you wouldn’t have been able to recover from, no matter how deep, no matter how traumatic. The one thing you can’t recover from is a 100% loss. That’s not based on a complicated financial formula. It’s just math.