Being extraordinarily smart does not make you immune to terrible financial decisions. Sir Isaac Newton proved this.

By 1720, Newton was not only the person who discovered gravity and co-invented calculus; he was also working as the Master of the Royal Mint and spent his days chasing counterfeiters, setting standards for national currencies and balancing huge balance sheets. He knew more about mathematics, economics and risks than almost anyone else at that time.

But when the speculative bubble hit London, all his wisdom and experience became irrelevant.

The bubble was all about the South Sea Company, a company which made an enormous bargain with the British government and took national debts on itself and got exclusive trading rights in Spanish America in return. While the actual earnings from the trade were negligible, the publicity surrounding the deal was immense. Seeing this, Newton invested in the company early on.

At first, he handled the position like a textbook disciplined investor. As the stock steadily climbed through the spring of 1720, he decided not to push his luck. By April, he sold all his shares for around £7000. He had invested £3500, so he doubled his money and walked away. It was right around this time that he famously realized he could “calculate the motions of heavenly bodies, but not the madness of people.”

Now the FOMO kicked in. It’s something that every investor faces when he sees the market going higher after getting out of it.

Contrary to what he expected, South Sea stock skyrocketed from April to July. Having already sold his shares for a 100% profit, Newton sat back and watched as London society, politicians, and close friends turned modest sums into vast fortunes on paper. What should have felt like a massive win suddenly felt like a terrible mistake.

His FOMO became too much to bear, and he let go of his discipline by pouring virtually all his net worth back into the stock.

The timing could not have been worse. The mania ran out of buyers, insiders and investors cashed out, and the bubble popped. The stock went into a freefall, crashing back under £200 by the end of 1720.

Newton lost around £20,000, the equivalent of roughly $4.5 million today. The crash wiped out his earlier profits and also wiped out a huge portion of his life savings. He took the loss so hard that he didn’t let anyone say the words “South Sea” anywhere near him. 1

This is probably one of the most interesting examples in history to show that investments are not an intelligence test. No matter how intelligent you are, there will be no escape from the laws of psychology, especially when emotions like regret and FOMO come into play.

His name was Marcus Licinius Crassus, and here is how he built his fortune.

Buying the Dip

Unsurprisingly, his fortune has a controversial entry point. For Crassus, it was the civil wars happening between Sulla and the Marian Faction in 82 BCE.

When Sulla took power as dictator, he created the proscriptions, a list of political enemies whose estates were confiscated by the state and auctioned off at rock-bottom prices. Most Romans hesitated out of fear or morals, but Crassus saw this as a giant opportunity.

He used his initial capital to bid for vast amounts of land, villas and agricultural estates across Italy. By buying when blood was quite literally in the streets, Crassus established a massive base of productive real estate and agricultural land. This was opportunistic distressed buying. He knew that market sentiment drops fastest during political instability, and that assets like land will retain their value after instability subsides.

The Private Fire Brigade

Crassus’s most famous, and predatory, business was his Rome-wide firefighting force. Ancient Rome was plagued by constant fires due to wooden architecture and tight alleys, and open flames that were used for heating and cooking.

Seeing this, Crassus formed a private brigade of over 500 slaves who were trained as architects, engineers, and builders. When real estate caught fire, Crassus’s team would quickly get to the scene, but they wouldn’t extinguish the fire. They would start negotiating.

They would approach the property owner and offer to buy the burning building, along with any neighbouring properties that were on fire or threatened by the fire, right on the spot for a fraction of its real value. If the owner agreed under the immense pressure, they would buy the land, extinguish the fire, and his builders would start renovating the property. If the owner refused to sell it, they would let the property burn, and sometimes offer to buy it after it had burned down for even less. Through this cycle, Crassus was able to own a massive portion of rental housing in Rome, generating a lot of cash flow through rents collected as the city expanded in population

Vertically Integrated Labour and Silver Mines

Real estate wasn’t Crassus’s only asset. He was great at vertical integration across multiple sectors. He owned silver mines in Spain, providing a direct supply of metals that were minted into coins or used as collateral. He also “invested” in human capital by purchasing enslaved workers and training them to do whatever labour he needed done. He would then lease out his workforce to other Roman elites or use them to manage his own enterprise.

Crassus also lent out money, for financial gain and also political gain. He would lend money interest-free to up and coming politcians. He actually lent money to a young, deeply in debt Julius Caesar. Doing this, he gained political protection, influence in politics and access to any potential future state contracts.

His Fatal Expansion

Despite controlling Rome’s economy, Crassus lacked the military strength and knowledge of his Triumvirate partners, Pompey and Caesar. In 53 BCE, desperate for some military clout, he funded and led an invasion of the Parthian Empire.

This was probably one of the worst misallocations of capital in military history. At the Battle of Carrhae, a city in Mesopotamia, the heavily armoured Roman legions were completely outmaneuvered by Parthian horse archers. Crassus was killed and according to a legend, the Parthians poured molten gold down his throat to mock his greed for wealth.

His downfall teaches a lesson: skills in one area don’t translate seamlessly to another area, and investing in something without properly understanding it can wipe out a lifetime of gains.

However, you can invest your emergency fund in a way that aims to beat inflation while remaining relatively stable, or even more stable than just cash.

The Strategy: The 90/10 Split

The goal of this strategy is to keep the majority of your money safe while using a small portion to drive growth so that your emergency fund can outpace inflation. What I’ll be writing about is a strategy that invovles 90% in cash-like assets and 10% in stocks.

The 90% (Safety): This portion ensures that most of your money is there when you need it and protects against market volatility.

The 10% (Growth): This small slice acts as an equity kicker to help the portfolio grow over long periods so you do not have to keep topping it off manually to keep up with rising prices.

One way to manage the risk of a severe market drop is to overfund the account by the amount you have in equities, or in this case, 10%. Let’s say your emergency fund covers 3 months of expnses, and for you that is $10, 000. You could aim to save $11,000 with $10,000 being in cash-like assets and $1,000 in stocks. This is an optional step, but it provides a cushion so that even if the stock portion drops, you still have your core $10,000 available, and could also make you feel less stressed about your emergency fund during both good and bad times.

Long-Term Returns

To see why this works, we can look at backtested data from December 31, 1969, through February 25, 2026. In this backtest, “cash” is represented by T-Bills, and “equity” is represented by a market-cap-weighted global stock market index fund from Vanguard.

When we adjust these returns for inflation, the difference between pure cash and a 90/10 split becomes clear.

As shown in the performance chart, a 10% tilt toward global stocks resulted in a much higher return compared to just holding T-Bills.

It is also important to look at drawdowns. While the 90/10 portfolio seems to experience more price movement than cash, the risk is often smaller than people realize. Even during major market crashes, the total impact on the portfolio is limited because 90% of the fund remains in stable assets. Being in cash had both a higher max drawdown, and higher average drawdowns.

Because the drawdowns for a 90/10 portfolio are typically shallow, the return required to get back to even is very low.

How to Build the 90% Base for Canadians

For the 90% portion, you want assets that are stable and easy to access. In Canada, you have several strong options:

• High Interest Savings Accounts (HISA): These provide the best liquidity and same-day access to your cash. You can use the HighInterestSavings.ca chart to find banks offering the highest rates.

• Money Market ETFs (ZMMK or CASH): These ETFs typically offer higher yields than traditional bank accounts. They are very stable but require one business day for trades to settle before you can withdraw the cash.

• T-Bill ETFs (CBIL): This ETF holds short-term Government of Canada Treasury Bills and is one of the safest places to park cash in the Canadian market.

• Cashable GICs: These offer a guaranteed interest rate but allow you to withdraw your money early if an emergency happens.

How to Build the 10% Growth Kicker for Canadians

For the 10% portion, the simplest approach is a broad global stock market ETF. Total Market ETFs (ZEQT or CAGE): These are low-cost, all-in-one funds that hold stocks from Canada, the US, and international markets. They handle all the rebalancing for you so your 10% allocation stays on track. If one wants even less risk, they can invest in a different asset allocation ETF that also holds bonds.

Rebalancing

To keep your emergency fund effective, you need to ensure the 10% equity slice doesn’t grow so large that it exposes you to too much risk, or shrink so much that you lose your inflation protection.

It is probably best to just rebalance once a year to fix your allocations.

Once a year, review the total balance of your fund. If your stocks have grown significantly (for example, to 15% of the total), sell the excess and move it into your HISA or money market fund. This effectively “locks in” your market gains into the safe portion of your safety net. If a market downturn has reduced your equity portion to 7% or 8%, move some cash from your 90% base into your global ETF, or direct new savings to your emergency fund’s etf.

Conclusion

Investing your emergency fund is a personal choice. It may be best suited for people with stable jobs and no high-interest debt. By using a 90/10 split and focusing on high interest savings and global stocks, you can protect your savings from being eroded by inflation while keeping your safety net intact.

You can view the full 50-year backtest and data used for this article here: https://testfol.io/?s=aZLYJSI8JSR

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