9 ms·

Ask HN: What do we do with cash now that inflation is a risk?

66 points by soferio 5y ago

What does History tell us is the empirically correct investment strategy in a period of forthcoming inflation? For max return? For safety?

tacostakohashi 5y ago
Inflation has always been a risk, what's happening "now" is that the risk has been realized. For that reason, all the best ways to deal with inflation have just shot up in price to the point where yields are unattractive. It's like asking "where do I get a cheap umbrella now that it's raining?", it's basically too late, the trick is to account for the risk before it is realized.
lolive 5y ago
Food and Books. [does money have other relevant purposes?]
- lmarcos 5y ago
  Shelter, I would add.
sglazer 5y ago
For max return and safety, I go with stocks that, on weighted average, have a low beta, preferably in the 0.80s. These stocks trend continuously upward and don’t suffer as much from sudden market downturns. They keep up with inflation.
next_xibalba 5y ago
In May 2020, Paul Tudor Jones, an investor with a long track record of success, accurately predicted our current predicament and recommended [1] the following trades as good inflation hedges: - Gold - The Yield Curve (long US2Y, short US10Y) - NASDAQ 100 - Bitcoin - US cyclicals (long)/US defensive (short) - AUDJPY - TIPS (Treasury Inflation-Protected Securities) - GSCI (Goldman Sachs Commodity Index) - JPM Emerging Market Currency Index One caveat is that some of these bets are not easily accessible to retail traders. Another is that TIPS are disputed as a good inflation hedge. One reason for this is that they are indexed to the CPI, which, some argue, significantly understates real inflation. With inflation already raging, the upside on these bets might not be great if placed in March 2022. Of course, if you expect high inflation to be persistent, these may still be viable. [1] https://www.docdroid.net/H1fuimX/the-great-monetary-inflation-pdf https://www.docdroid.net/H1fuimX/the-great-monetary-inflatio...
- metabro 5y ago
  Doesn’t this read like “just invest in anything”? OPs q is “what” to invest in given that one can’t hold cash when inflation is rampant. I’m just continuing to buy us equities with a tilt towards the nasdaq 100. But I have no idea how that will work out in the next 10years. The other option is to just make as big downpayment as I can (200-400k) in the Bay Area but not really sold on living here long term.
  - next_xibalba 5y ago
    > Doesn’t this read like “just invest in anything”? Not really. Even if you did everything in that list, its a tiny slice of the universe of invest-able assets. This is a quite specific, prescriptive list of things to hold as alternatives to cash in the current period of high inflation. Now, the opportunity may have been traded away in the time since this was published. Commodities, for example, have seen significant price appreciation.
fuzzfactor 5y ago
Invest in yourself sooner rather than later.
rdtwo 5y ago
I’m buying more house.
- fatnoah 5y ago
  I don't know if you're joking or not, but for me, that was one consideration in figuring out what to do with stocks I sold when things started going downhill. I'm leaning heavily towards making some home improvements vs. investing in something else.
  - rdtwo 5y ago
    I’m not kidding I’m buying more house before all that notional dollar value is tiny. Also 4% internet and 7-9% inflation… eventually wages will catch up.
lmedinas 5y ago
Cryptocurrency and Gold ?
- ilikecode 5y ago
  How can I buy bread with a gold bar? Serious opening question as I have a lot of cash to convert. I don't see the benefit in having gold if I expect cash to inflate to worthlessness eventually.
  - QuarterReptile 5y ago
    My guess is that you buy gold denominated in much snaller weights. If cash inflates to worthlessness, gold may be the thing to get people moving for you.
- exolymph 5y ago
  I invest in crypto, but it's worth noting that prices follow the stock market / larger economy. Correlated asset.
- muzani 5y ago
  Just some speculation, but these often go up with the perception of inflation. The USA is often lagging far behind global inflation, so by the time Americans buy gold, the price might be high.
m1117 5y ago
Stocks!
- teknopaul 5y ago
  And work to reduce C-suite pay that eats up your stock's value. It's quite a big issue for small investors that C-suite pay makes stock less attractive. Leads to a lot property being over priced and that badly affects people wanting to live in the property.
awb 5y ago
Assets are a hedge against inflation. Stocks, real estate, art, etc. The more utility and stability, the safer the investment. The more speculative or novel, the riskier the investment. Real estate and property are typically pretty safe and have some utility. As are bonds (but most might not keep up with high inflation, just dampen the effects). Novel assets like crypto, NFTs, etc. will likely produce higher variability in returns (either positive or negative).
- PopAlongKid 5y ago
  >As are bonds (but most might not keep up with high inflation, just dampen the effects) U.S. government TIPS or I-bonds https://www.thebalance.com/comparing-tips-to-i-bonds-2388668 https://www.thebalance.com/comparing-tips-to-i-bonds-2388668
  - toomuchtodo 5y ago
    Ibonds have a $10k per person per year limit ($5k extra if you buy paper bonds with a tax refund), and if you use your kid’s SSN, it’s considered a gift to them. Things to keep in mind. Not investing advice.
- greatpostman 5y ago
  Actually stocks trade flat or lower in inflation, and risk assets like crypto drop. Real estate is a good hedge
  - baremetal 5y ago
    my farmland is doing great, up about 20% since i bought it last year. and currently produces a small annual income renting it out over the summer. a 2% dividend for doing nothing. and if i plant winter wheat...
    - captainredbeard 5y ago
      > and if i plant winter wheat... Maybe you'll net $500 an acre if you're lucky? If you're unlucky, you can easily lose that or more.
exolymph 5y ago
Invest in stuff — TINA, "there is no alternative." Stocks and crypto if you highly prize liquidity and are investing for the long haul (e.g. you won't take the money out again until decades from now). Real estate, not because it's crash-resistant but because it has tangible utility. Most of all invest in your community and relationships. Those are always the best prep, whether we're talking financial or disaster preparedness.
- agent008t 5y ago
  What is the point of abbreviation like TINA, if people usually specify what they mean every time they use them?
  - teknopaul 5y ago
    I learned something. Might b usfl in a txt.
dilippkumar 5y ago
Not an expert by any means - but if you can buy a loan with pre-inflation interest rates, then you’ll benefit from the inflation eating up some of the debt. This makes it a good time to borrow iff 1. There is something meaningful/profitable that you can do with the borrowed money 2. Your credibility allows you to buy a loan at cheap prices 3. Your inflation predictions are accurate 4. Your loan’s terms keep the interest rate fixed at a rate less than the inflation you expect As for myself, I don’t think I can put extra capital to profitable use right now, so I’m not going to be borrowing any money.
- thebean11 5y ago
  Yeah I'm considering buying a home (with mortgage of course) for this reason
muzani 5y ago
I live in a developing country where inflation is moderate. Just do anything other than holding on to the money. Starting a business becomes substantially less risk than taking a job. Some people would say buy property etc and you can just raise rent along with inflation. But it doesn't necessarily work that way; the prices may actually go up slower than inflation.
lazerpants 5y ago
After considering the risks I put some of my money into Gemini as GUSD yielding around 8%. After paying the taxes on that you're at least close to inflation. I chose Gemini because of their NY state compliance and their attempts to be compliant ahead of government regulation. I still wouldn't put all of my money in Gemini but it is a highly liquid, high-yielding, way to diversify and get some yield. Full disclosure: I do stand to benefit from Gemini's success due to associates having equity, but I used GUSD and Gemini Earn prior to having that connection.
Bostonian 5y ago
Lots of people have recommended stocks, but if market are efficient, it should not be possible to predict the excess returns of stocks or bonds over cash using public information such as the current level of inflation.
- radford-neal 5y ago
  It's true that the price of stocks should already reflect that there may, or may not, be high inflation in the future. But if you're worried about the risk of high inflation, switching to stocks from cash could make sense, even it does not increase your expected return. On the other hand, though stocks represent real assets that should be a protection against inflation, their value is also highly related to general economic conditions, which typically are rather poor when high inflation is causing general chaos. So it's unclear...
- arisAlexis 5y ago
  The profit comes from just holding stuff that generates value and not by buying something belownits intrinsic value
andrewmcwatters 5y ago
I never see anyone mention this, but I don't buy the idea—perhaps based on a gut feeling versus reading any particular studies—that it's wise to just stick your cash into any asset vehicle because inflation is ever persistent. Well it's ever persistent for everyone, and if everyone is buying, it's not impossible to purchase something beyond its fair value. For instance, if you bought into US equities on Feb 10th, you would have lost over 24% by March 23rd. If you held it until now, you would have made back your losses... but if you bought broad equities on EOY 2021, you would have lost more than inflation up to this point in 2022. Ray Dalio mentioned his confusion about markets not crashing when he was young because the dollar became untethered from gold a second time in U.S. history, and he later realized buying assets when central banks print was a "rhyme" in economics history--these events don't repeat perfectly, but similar situations occur over time. In his case, it was a repeat event. But I hate with a passion when people talk about generally what you should do without ever talking about mechanical limits to that type of decision making. It's so pervasive that you get studies put out by financial institutions saying you're better to always be fully invested, and to never set aside cash. Could you elaborate on that? Or is it because you're an institution getting paid on expense ratios based on AUM. The whole attitude industry-wide is gross and conflicting to me. If you refused to buy when general equities were historically high at any point in time and held on to cash while eating inflation, when market prices came down and you bought when valuations were fair value you would have made money, you didn't lose it simply because inflation was present. It always is. But you have a choice of whether you want to buy a dollar of assets for two, or if you want to buy a dollar of assets for 80 cents. That's NOT MARKET TIMING. That's refusing to buy something when it's overvalued, but people so grossly conflate the two that you can't have any reasonable discussion with a layperson about this concept because catch-all sayings predominantly reside in average investors' minds over studies and historic figures about asset management. Buy low, sell high! Buy and hold forever! Yeah, but what is "high"? And why would you hold something that is dying? I feel like the pop literature available to the public that is digestible covers some reasonable concepts but I think there are studies that either haven't been independently recreated to back simple common questions for the above average person, or they haven't been performed at all.
- UncleMeat 5y ago
Mezzie 5y ago
I can't speak to history, but I'm converting my cash into social capital. It won't directly get me more money, but I have a disability (MS) and therefore a variable-length career. (i.e. I can't plan on working until 60/65/etc. - I could have 3 years left, I could have 33.) The more of a safety net I enable to exist here, the more likely it will be here when I need it, and the more connections I make here now, the more likely it is someone will catch me when I fall. If you're JUST talking financial return (versus safety, hence my decision), it's entirely dependent on your timeline. Do you need to pull out in 1 year? 5? 20? 50? They all require different strategies.
- anonymousWithMS 5y ago
  What do you mean by "converting cash into social capital"? I can understand that you'd be prioritizing relationships, but how is cash entering this picture? Interested to hear more about this as I also have MS and share your concerns of having a time-limited career.
  - Mezzie 5y ago
    It's kind of similar to building a traditional portfolio in that you want to diversify; basically the overall 'goal' is to make it so that in the future when I need help, there will be enough people around with good memories of me/who owe me favors that I will get through it. The way cash enters into this: - Find some very small local non-profits or charity organizations. Find out what their average donation is, and then give them double for the next X years. Bonus points if it's a non-profit or organization that does something you might need in the future. Often you'll get to know their leadership. This is by far the main one. - I'm upper-middle class but from a working-class background, so I help people with things like legal expenses, because a lot of people get screwed but can't do anything about it. Likewise, I might kick in for a deposit somewhere if somebody's living in unsafe conditions but can't move because they can't come up with an extra ~$700. This kind of thing you only do if the person's legit, obviously. - I buy things that I can lend to other people/make relationships over. Have a snowblower? Lend it to my neighbor. Same with tools. I try to make myself a good neighbor to have. (Not just with cash, but that's one asset I have). - Join spaces that put you in contact with others. Co-working spaces, maker spaces, etc. Take classes, get to know people. Bonus if the classes are something that will allow you to barter in the future if you're income-limited. Convert your cash into skills you can retain and barter with in the future. This stuff also increases your network radically, which can be helpful if you need to suddenly make a career switch, or drop down to part-time. This is easier to do in a small town or city, for obvious reasons. Standing out in NYC or SV probably isn't as possible on a software dev salary, but it is in plenty of smaller locales. I don't know how it's going to work, but obviously the standard advice is less applicable in our situation. This also allows you to easily shift how many assets/how much cash on hand you have, which can be key for affording financial assistance through a relapse, since so many programs will bleed you dry first and then be shocked you continue to need help.
aynyc 5y ago
As far as I know, the only accessible hedge strategy is to take on debt, which usually means mortgage loans. But mortgage usually comes with different risk and more work.
- mostly_harmless 5y ago
  This only makes sense if you have positive-risk-adjusted-return investments you've been waiting to make. If you already have too much cash with no where to put it, borrowing more cash makes no sense.
anm89 5y ago
Commodities, real estate and debt. I would argue real estate isn't as much of a sure things as some people suggest as it could be rate sensitive and it could correlate with equity markets over the long term.
- deleted 5y ago
  [deleted]
yulaow 5y ago
Honestly I keep the same investment strategy I had before and stay diversified (80% etf stock, 10% etf bond, 10% "maybe I'll never see the money back, whatever" crypto) and keep investing the same percentage of my salary (20% monthly) I am looking at least to 20years from now before withdrawing something. I don't know how much will last this inflation period, how big it will go, how it will affect the stock/crypto/bond market, whatever other "it will happen only every 50 years" absurd event will happen in the next years after a pandemic and a (let's hope almost) world war 3, etc... So it makes no sense to change my investment strat now if I can't even predict the situation in 3 months.
- KptMarchewa 5y ago
  Very similar. Only difference is 10% gold instead of crypto.
- notananthem 5y ago
  This is the way. There's more granular things you can get into but this is it and your etf/mf should be a zero/near zero fee index.
notjustanymike 5y ago
You can't time the market. The bubble was supposed to burst years ago, but kept going up. Just stagger your investment, either monthly or quarterly. If you're not confident in your own knowledge then Schwab has a robo-investor that will do you well.
- chii 5y ago
  If people are waiting for the bubble to burst while holding cash to buy in, the bubble will not burst.
h0p3 5y ago
I have a similar question, but not for the wealthy: https://philosopher.life/#Unorthodox%20Savings https://philosopher.life/#Unorthodox%20Savings
tbirdz 5y ago
buy some I bonds from the US treasury at treasurydirect.gov. They are guaranteed to match inflation.
- anamax 5y ago
  > They are guaranteed to match inflation. They are guaranteed to match a specific US govt inflation measure. The $64k question is whether that measure is realistic and competitive. Does it include housing? Energy? Food?
  - deleted 5y ago
    [deleted]

66 points by soferio 5y ago

What does History tell us is the empirically correct investment strategy in a period of forthcoming inflation? For max return? For safety?

tacostakohashi 5y ago

Inflation has always been a risk, what's happening "now" is that the risk has been realized. For that reason, all the best ways to deal with inflation have just shot up in price to the point where yields are unattractive. It's like asking "where do I get a cheap umbrella now that it's raining?", it's basically too late, the trick is to account for the risk before it is realized.

lolive 5y ago

Food and Books. [does money have other relevant purposes?]

lmarcos 5y ago
Shelter, I would add.

sglazer 5y ago

For max return and safety, I go with stocks that, on weighted average, have a low beta, preferably in the 0.80s. These stocks trend continuously upward and don’t suffer as much from sudden market downturns. They keep up with inflation.

next_xibalba 5y ago

In May 2020, Paul Tudor Jones, an investor with a long track record of success, accurately predicted our current predicament and recommended [1] the following trades as good inflation hedges: - Gold - The Yield Curve (long US2Y, short US10Y) - NASDAQ 100 - Bitcoin - US cyclicals (long)/US defensive (short) - AUDJPY - TIPS (Treasury Inflation-Protected Securities) - GSCI (Goldman Sachs Commodity Index) - JPM Emerging Market Currency Index One caveat is that some of these bets are not easily accessible to retail traders. Another is that TIPS are disputed as a good inflation hedge. One reason for this is that they are indexed to the CPI, which, some argue, significantly understates real inflation. With inflation already raging, the upside on these bets might not be great if placed in March 2022. Of course, if you expect high inflation to be persistent, these may still be viable. [1] https://www.docdroid.net/H1fuimX/the-great-monetary-inflation-pdf https://www.docdroid.net/H1fuimX/the-great-monetary-inflatio...

metabro 5y ago
Doesn’t this read like “just invest in anything”? OPs q is “what” to invest in given that one can’t hold cash when inflation is rampant. I’m just continuing to buy us equities with a tilt towards the nasdaq 100. But I have no idea how that will work out in the next 10years. The other option is to just make as big downpayment as I can (200-400k) in the Bay Area but not really sold on living here long term.
- next_xibalba 5y ago
  > Doesn’t this read like “just invest in anything”? Not really. Even if you did everything in that list, its a tiny slice of the universe of invest-able assets. This is a quite specific, prescriptive list of things to hold as alternatives to cash in the current period of high inflation. Now, the opportunity may have been traded away in the time since this was published. Commodities, for example, have seen significant price appreciation.

fuzzfactor 5y ago

Invest in yourself sooner rather than later.

rdtwo 5y ago

I’m buying more house.

fatnoah 5y ago
I don't know if you're joking or not, but for me, that was one consideration in figuring out what to do with stocks I sold when things started going downhill. I'm leaning heavily towards making some home improvements vs. investing in something else.
- rdtwo 5y ago
  I’m not kidding I’m buying more house before all that notional dollar value is tiny. Also 4% internet and 7-9% inflation… eventually wages will catch up.

lmedinas 5y ago

Cryptocurrency and Gold ?

ilikecode 5y ago
How can I buy bread with a gold bar? Serious opening question as I have a lot of cash to convert. I don't see the benefit in having gold if I expect cash to inflate to worthlessness eventually.
- QuarterReptile 5y ago
  My guess is that you buy gold denominated in much snaller weights. If cash inflates to worthlessness, gold may be the thing to get people moving for you.
exolymph 5y ago
I invest in crypto, but it's worth noting that prices follow the stock market / larger economy. Correlated asset.
muzani 5y ago
Just some speculation, but these often go up with the perception of inflation. The USA is often lagging far behind global inflation, so by the time Americans buy gold, the price might be high.

m1117 5y ago

Stocks!

teknopaul 5y ago
And work to reduce C-suite pay that eats up your stock's value. It's quite a big issue for small investors that C-suite pay makes stock less attractive. Leads to a lot property being over priced and that badly affects people wanting to live in the property.

awb 5y ago

Assets are a hedge against inflation. Stocks, real estate, art, etc. The more utility and stability, the safer the investment. The more speculative or novel, the riskier the investment. Real estate and property are typically pretty safe and have some utility. As are bonds (but most might not keep up with high inflation, just dampen the effects). Novel assets like crypto, NFTs, etc. will likely produce higher variability in returns (either positive or negative).

PopAlongKid 5y ago
>As are bonds (but most might not keep up with high inflation, just dampen the effects) U.S. government TIPS or I-bonds https://www.thebalance.com/comparing-tips-to-i-bonds-2388668 https://www.thebalance.com/comparing-tips-to-i-bonds-2388668
- toomuchtodo 5y ago
  Ibonds have a $10k per person per year limit ($5k extra if you buy paper bonds with a tax refund), and if you use your kid’s SSN, it’s considered a gift to them. Things to keep in mind. Not investing advice.
greatpostman 5y ago
Actually stocks trade flat or lower in inflation, and risk assets like crypto drop. Real estate is a good hedge
- baremetal 5y ago
  my farmland is doing great, up about 20% since i bought it last year. and currently produces a small annual income renting it out over the summer. a 2% dividend for doing nothing. and if i plant winter wheat...
  - captainredbeard 5y ago
    > and if i plant winter wheat... Maybe you'll net $500 an acre if you're lucky? If you're unlucky, you can easily lose that or more.

exolymph 5y ago

Invest in stuff — TINA, "there is no alternative." Stocks and crypto if you highly prize liquidity and are investing for the long haul (e.g. you won't take the money out again until decades from now). Real estate, not because it's crash-resistant but because it has tangible utility. Most of all invest in your community and relationships. Those are always the best prep, whether we're talking financial or disaster preparedness.

agent008t 5y ago
What is the point of abbreviation like TINA, if people usually specify what they mean every time they use them?
- teknopaul 5y ago
  I learned something. Might b usfl in a txt.

dilippkumar 5y ago

Not an expert by any means - but if you can buy a loan with pre-inflation interest rates, then you’ll benefit from the inflation eating up some of the debt. This makes it a good time to borrow iff 1. There is something meaningful/profitable that you can do with the borrowed money 2. Your credibility allows you to buy a loan at cheap prices 3. Your inflation predictions are accurate 4. Your loan’s terms keep the interest rate fixed at a rate less than the inflation you expect As for myself, I don’t think I can put extra capital to profitable use right now, so I’m not going to be borrowing any money.

thebean11 5y ago
Yeah I'm considering buying a home (with mortgage of course) for this reason

muzani 5y ago

I live in a developing country where inflation is moderate. Just do anything other than holding on to the money. Starting a business becomes substantially less risk than taking a job. Some people would say buy property etc and you can just raise rent along with inflation. But it doesn't necessarily work that way; the prices may actually go up slower than inflation.

lazerpants 5y ago

After considering the risks I put some of my money into Gemini as GUSD yielding around 8%. After paying the taxes on that you're at least close to inflation. I chose Gemini because of their NY state compliance and their attempts to be compliant ahead of government regulation. I still wouldn't put all of my money in Gemini but it is a highly liquid, high-yielding, way to diversify and get some yield. Full disclosure: I do stand to benefit from Gemini's success due to associates having equity, but I used GUSD and Gemini Earn prior to having that connection.

Bostonian 5y ago

Lots of people have recommended stocks, but if market are efficient, it should not be possible to predict the excess returns of stocks or bonds over cash using public information such as the current level of inflation.

radford-neal 5y ago
It's true that the price of stocks should already reflect that there may, or may not, be high inflation in the future. But if you're worried about the risk of high inflation, switching to stocks from cash could make sense, even it does not increase your expected return. On the other hand, though stocks represent real assets that should be a protection against inflation, their value is also highly related to general economic conditions, which typically are rather poor when high inflation is causing general chaos. So it's unclear...
arisAlexis 5y ago
The profit comes from just holding stuff that generates value and not by buying something belownits intrinsic value

andrewmcwatters 5y ago

I never see anyone mention this, but I don't buy the idea—perhaps based on a gut feeling versus reading any particular studies—that it's wise to just stick your cash into any asset vehicle because inflation is ever persistent. Well it's ever persistent for everyone, and if everyone is buying, it's not impossible to purchase something beyond its fair value. For instance, if you bought into US equities on Feb 10th, you would have lost over 24% by March 23rd. If you held it until now, you would have made back your losses... but if you bought broad equities on EOY 2021, you would have lost more than inflation up to this point in 2022. Ray Dalio mentioned his confusion about markets not crashing when he was young because the dollar became untethered from gold a second time in U.S. history, and he later realized buying assets when central banks print was a "rhyme" in economics history--these events don't repeat perfectly, but similar situations occur over time. In his case, it was a repeat event. But I hate with a passion when people talk about generally what you should do without ever talking about mechanical limits to that type of decision making. It's so pervasive that you get studies put out by financial institutions saying you're better to always be fully invested, and to never set aside cash. Could you elaborate on that? Or is it because you're an institution getting paid on expense ratios based on AUM. The whole attitude industry-wide is gross and conflicting to me. If you refused to buy when general equities were historically high at any point in time and held on to cash while eating inflation, when market prices came down and you bought when valuations were fair value you would have made money, you didn't lose it simply because inflation was present. It always is. But you have a choice of whether you want to buy a dollar of assets for two, or if you want to buy a dollar of assets for 80 cents. That's NOT MARKET TIMING. That's refusing to buy something when it's overvalued, but people so grossly conflate the two that you can't have any reasonable discussion with a layperson about this concept because catch-all sayings predominantly reside in average investors' minds over studies and historic figures about asset management. Buy low, sell high! Buy and hold forever! Yeah, but what is "high"? And why would you hold something that is dying? I feel like the pop literature available to the public that is digestible covers some reasonable concepts but I think there are studies that either haven't been independently recreated to back simple common questions for the above average person, or they haven't been performed at all.

UncleMeat 5y ago

Mezzie 5y ago

I can't speak to history, but I'm converting my cash into social capital. It won't directly get me more money, but I have a disability (MS) and therefore a variable-length career. (i.e. I can't plan on working until 60/65/etc. - I could have 3 years left, I could have 33.) The more of a safety net I enable to exist here, the more likely it will be here when I need it, and the more connections I make here now, the more likely it is someone will catch me when I fall. If you're JUST talking financial return (versus safety, hence my decision), it's entirely dependent on your timeline. Do you need to pull out in 1 year? 5? 20? 50? They all require different strategies.

anonymousWithMS 5y ago
What do you mean by "converting cash into social capital"? I can understand that you'd be prioritizing relationships, but how is cash entering this picture? Interested to hear more about this as I also have MS and share your concerns of having a time-limited career.
- Mezzie 5y ago
  It's kind of similar to building a traditional portfolio in that you want to diversify; basically the overall 'goal' is to make it so that in the future when I need help, there will be enough people around with good memories of me/who owe me favors that I will get through it. The way cash enters into this: - Find some very small local non-profits or charity organizations. Find out what their average donation is, and then give them double for the next X years. Bonus points if it's a non-profit or organization that does something you might need in the future. Often you'll get to know their leadership. This is by far the main one. - I'm upper-middle class but from a working-class background, so I help people with things like legal expenses, because a lot of people get screwed but can't do anything about it. Likewise, I might kick in for a deposit somewhere if somebody's living in unsafe conditions but can't move because they can't come up with an extra ~$700. This kind of thing you only do if the person's legit, obviously. - I buy things that I can lend to other people/make relationships over. Have a snowblower? Lend it to my neighbor. Same with tools. I try to make myself a good neighbor to have. (Not just with cash, but that's one asset I have). - Join spaces that put you in contact with others. Co-working spaces, maker spaces, etc. Take classes, get to know people. Bonus if the classes are something that will allow you to barter in the future if you're income-limited. Convert your cash into skills you can retain and barter with in the future. This stuff also increases your network radically, which can be helpful if you need to suddenly make a career switch, or drop down to part-time. This is easier to do in a small town or city, for obvious reasons. Standing out in NYC or SV probably isn't as possible on a software dev salary, but it is in plenty of smaller locales. I don't know how it's going to work, but obviously the standard advice is less applicable in our situation. This also allows you to easily shift how many assets/how much cash on hand you have, which can be key for affording financial assistance through a relapse, since so many programs will bleed you dry first and then be shocked you continue to need help.

aynyc 5y ago

As far as I know, the only accessible hedge strategy is to take on debt, which usually means mortgage loans. But mortgage usually comes with different risk and more work.

mostly_harmless 5y ago
This only makes sense if you have positive-risk-adjusted-return investments you've been waiting to make. If you already have too much cash with no where to put it, borrowing more cash makes no sense.

anm89 5y ago

Commodities, real estate and debt. I would argue real estate isn't as much of a sure things as some people suggest as it could be rate sensitive and it could correlate with equity markets over the long term.

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yulaow 5y ago

Honestly I keep the same investment strategy I had before and stay diversified (80% etf stock, 10% etf bond, 10% "maybe I'll never see the money back, whatever" crypto) and keep investing the same percentage of my salary (20% monthly) I am looking at least to 20years from now before withdrawing something. I don't know how much will last this inflation period, how big it will go, how it will affect the stock/crypto/bond market, whatever other "it will happen only every 50 years" absurd event will happen in the next years after a pandemic and a (let's hope almost) world war 3, etc... So it makes no sense to change my investment strat now if I can't even predict the situation in 3 months.

KptMarchewa 5y ago
Very similar. Only difference is 10% gold instead of crypto.
notananthem 5y ago
This is the way. There's more granular things you can get into but this is it and your etf/mf should be a zero/near zero fee index.

notjustanymike 5y ago

You can't time the market. The bubble was supposed to burst years ago, but kept going up. Just stagger your investment, either monthly or quarterly. If you're not confident in your own knowledge then Schwab has a robo-investor that will do you well.

chii 5y ago
If people are waiting for the bubble to burst while holding cash to buy in, the bubble will not burst.

h0p3 5y ago

I have a similar question, but not for the wealthy: https://philosopher.life/#Unorthodox%20Savings https://philosopher.life/#Unorthodox%20Savings

tbirdz 5y ago

buy some I bonds from the US treasury at treasurydirect.gov. They are guaranteed to match inflation.

anamax 5y ago
> They are guaranteed to match inflation. They are guaranteed to match a specific US govt inflation measure. The $64k question is whether that measure is realistic and competitive. Does it include housing? Energy? Food?
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