Wealth management CEO says 'worrying more about downside than upside' is an investor's Achilles Heel. But is this market the exception?

Many young investors are keeping their cash on the sidelines, and financial experts say that could be their biggest mistake.

Josh Brown, CEO of Ritholtz Wealth Management, says too many young investors are fixated on protecting themselves from losses instead of building wealth for the long term.

“When you’re young, worrying more about downside than upside is probably the biggest mistake,” Brown said in a recent CNBC interview (1).

However, in Canada, inflation, housing costs and high interest rates have the younger generation exercising caution about how to manage their finances for the long term, especially as budgets remain constrained. Is now really the time to take on risk?

Young investors fear the stock market

A TD survey found that almost half of 45% of Gen Z and Millennial investors in Canada base their decisions more on instinct than analysis (2).

This intuitive approach to participating in the stock market has culminated in a more bearish outlook, with 69% of respondents being concerned about market volatility, while one in three (34%) would use the word “anxiety” to best describe how they feel about investing.

Yet financial experts like Brown say that fear can be costly.

“Young investors have time — the one thing every professional investor wishes they could buy,” Brown said. “When you appreciate how much time you have, you recognize the benefit of long-term compounding.”

That time advantage lets Canadians in their 20s and 30s ride out short-term volatility and benefit from compound growth. Yet, the market mood in 2025 is understandably tense.

Inflation has cooled but remains above the Bank of Canada’s 2% target (3). Meanwhile, U.S.–China tariffs and global supply-chain friction have driven up costs for Canadian exporters and importers alike (4).

That uncertainty has made safer, interest-bearing assets more tempting. Some Canadian banks now offer GIC rates at a modest 3% to 4% rate, while high-interest savings accounts are delivering yields at up to 4.95%.

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A more innovative way to take risks

Financial professionals would argue that the key isn’t to eliminate risk — it’s to take it intelligently.

Rather than trying to pick individual winners, young Canadians can start with low-cost exchange-traded funds (ETFs) that track major indexes like the S&P/TSX Composite or S&P 500.

Funds such as the Vanguard All-Equity ETF Portfolio (VEQT) or the iShares Core Equity ETF Portfolio (XEQT) provide diversified exposure across global markets in a single holding.

As investors move closer to primary life goals — a home, family or retirement — they can gradually rebalance toward safer assets such as bonds, money market funds or short-term GICs.

Meanwhile, recession-resistant sectors — such as healthcare, real estate and utilities — tend to hold up better when markets falter. And for those especially wary of volatility, blending stock exposure with a small portion of bonds or gold can provide stability without sacrificing growth potential.

Taxes matter, too

Tax strategy can significantly affect returns. Canadians can shelter investment growth through Tax-Free Savings Accounts (TFSAs) and Registered Retirement Savings Plans (RRSPs), which protect dividends and capital gains from annual taxes.

By contrast, holding large, dividend-paying stocks in taxable accounts can trigger annual tax bills that eat into capital gains. Fidelity Canada and RBC Wealth Management both warn that poorly structured portfolios can erode after-tax returns over time (5,6).

Time in the market beats timing the market. While GICs and savings accounts can stabilize your portfolio, relying on them too early could mean missing the growth you need to build real wealth.

If you’re in your 20s or 30s, consider leaning into diversified ETFs or index funds, using your TFSA and RRSP to grow tax-free, and gradually rebalance as your goals evolve.

“You have to get rich before you focus on preserving your wealth,” Brown reminds investors. A lesson that might matter even more during times of economic uncertainty in Canada.

Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

CNBC (1); TD (2); Reuters (3); Statistics Canada (4); Fidelity (5); RBC Wealth Management (6)