What is the real risk?

I hear it all the time: investing is risky and it is not a sure thing. I just read a good article by The Motley Fool that discusses how investment volatility is almost always associated with risk. Beta, as one measure of risk. measures how much more a particular investment (namely a stock) deviates from the actual returns or movement of the overall market. While I do not agree with the articles slight suggestion that we throw Beta and other volatility measurements out the window, I would agree that investment volatility and downside risk is NOT the biggest risk we face. The article does a good job of addressing the fact that the biggest risk we face in achieving any financial goal and more specifically or retirement goals is the risk of outliving our assets or drastically undermining our lifestyles due to a loss in purchasing power. As you know the costs of goods and services go up over time - around 4.1% on average per year to be exact. What does that meant to you? Your money must be growing to outpace that average or your purchasing power is losing value. They warn that many people avoid the investment risk associated with volatility and they make the grave mistake of socking away money in investments that are way too conservative like money markets, CDs, and short-term bonds. Don't be fooled and buy into the fear that investment risk is to be avoided at all costs - it is really the risk that you will lose your purchasing power or, worse, outlive your assets, that is the biggest risk of all. Stocks continue to be the best hedge we have against inflation. Almost everyone should have some portion of their assets in stocks to help mitigate inflationary erosion.