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the traditional "lower risk" portfolio as a function of age is to decrease allocation from stocks in favor of bonds. As previously mentioned, extremely high pri
by mxschumacher 5y ago
the traditional "lower risk" portfolio as a function of age is to decrease allocation from stocks in favor of bonds. As previously mentioned, extremely high prices for bonds coupled with substantial inflation means that bonds are no longer less risky. What's risky isn't so much a question of the asset class, but more about the price paid. Trillions of dollars are reaching for yield and it is not clear what a low risk asset might be in late 2021.
- paradite 5y agoI see where you are coming from. I didn't know about the bond situation. Is that US specific? The idea is to go for whatever that is currently accepted as low risk. For example, if bonds are considered risky, maybe high interest saving accounts are the next best option. And you can adjust your retirement goals accordingly.
- mxschumacher 5y agoNo, low interest rates are a global phenomenon. It has to be, because otherwise massive arbitrage opportunities would exist. interest saving accounts produce negative real returns, you cannot put enough money into one to generate the passive income you need to retire. The whole retire early idea is predicated on substantial investment returns and the ability to outpace inflation. Savings accounts won't cut it.