Inflation Russian Roulette

Cross-post from METAR:

Playing Inflation Russian Roulette in Retirement - Articles - Advisor Perspectives

Good article.

“The risk of blowing your brains out playing Russian Roulette are one in six, which I submit are a conservative estimate of the probability of significant future inflation, so why play retirement Russian Roulette with a nominal annuity or, for that matter, with long-term nominal bonds of any sort?”

We have some in the Vanguard Total Bond fund. Not much. Still, I’m kicking myself because I knew I should go shorter duration and did it with only about half.

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Perhaps it’s a good article. But I’m not sure yet. Because the article is published “today” … over the past 24 months, inflation was 14.45%. Does he expect lower, the same, or higher inflation over the next 24 months (or 240 months, etc)? Our investments over the past 24 months and done, whatever their results are can’t be changed, so only the future matters.

I think the crux of the article is that fixed income still doesn’t work for retirement assets. Only “real” investments work, things that, over the long term, grow roughly with inflation plus a little bit (stock index funds, real estate, ownership in a business, farmland, oil wells?, etc). That brings up a very big retirement investing issue that deserves a separate post, if I have time later today or tomorrow, I will write it. The issue is directly related to this statement from the article -

“as investors finally got their devoutly desired higher yields”

Like many religious beliefs, this is so wrong, so completely wrong, that it is absurdly wrong.