Q My wife and I are about five years from retirement and are very conservative when it comes to investing our retirement funds. Recently I watched a video -- endofamerica.com -- that I found disturbing. I'd like to know if you've watched it and, if so, what are your thoughts?

BOB

A I had heard of the video since it's making the rounds, and I decided to look at it after your note. The theme is the collapse of the U.S. government, the implosion of our debt and the many bad things that will come from the financial apocalypse.

My take: It's scare-mongering.

Yes, there's no shortage of people rightfully worried about the federal government's budget deficit and soaring debt levels. But I think the concern is misplaced in the short run. Much of the current fiscal situation reflects the cost of combatting the Great Recession. The U.S. government isn't broke, far from it. But long-term the budget deficit and steep government debts are ominous and unsustainable. The epicenter of the long-term fiscal problem in the U.S. is dealing with health care. In the U.S., health care reform and improving the federal government's finances are two sides of the same coin.

I don't want to get into a debate about fiscal policy in this column. (That's for another day.). I do want to take the opportunity to talk about thinking through risk. History is full of shocks and surprises, unexpected twists and turns, both on the downside and the upside.

Even a casual glance at history books shows investors struggling to cope with bear markets and bull markets, cataclysms like World War I, World War II, Sept. 11 and the Great Recession. The surprises aren't all negative. We've also seen new technologies that changed the way we live, such as railroads, radio and the Internet. We have to manage our money through the tumult. We can't eliminate the uncertainty.

That's why I believe it's best to manage our money with a "margin of safety." This perspective helps us steer between the Scylla of fear and Charybdis of greed. "When you build a bridge, you insist it can carry 30,000 pounds, but you only drive 10,000 pound trucks across it," says Warren Buffett, the Oracle of Omaha. "And that same principle works in investing."

The basic money question you should ask yourself is not "How much money will I make on my investments?" The real question is "How much can I afford to lose?" And if the unthinkable happens -- like a credit crunch, a recession, a further decline in home prices -- can you weather the storm?

I would ignore the "Apocalypse Now" crowd as well as the "You Too Can Be A Millionaire This Year" group. Instead, I would diversify and stay conservative.