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It would not collapse, but the inflows to the fund would. However, it would still likely provide for decades at least. Norway distributes the returns from the
by Workaccount2 2y ago
It would not collapse, but the inflows to the fund would.
However, it would still likely provide for decades at least. Norway distributes the returns from the fund, not the fund money itself.
- eru 2y ago> Norway distributes the returns from the fund, not the fund money itself. Is that adjusted for inflation? To explain, suppose I have a stock that went up 10% last year (and paid no dividends, to keep things simple). If inflation was also 10%, there was no real return from my investment, and nothing should be distributed. If inflation was 2%, my real return was about 8%, and we could distribute that without touching 'the fund money itself'.
- Workaccount2 2y agoInflation is usually priced pretty efficiently into securities on top of whatever growth. However, it gets a bit more complex when you are trading securities in multiple currencies. I am not sure how Norway handles that, but they almost certainly have a team of currency traders to manage it.
- eru 2y agoThis wasn't a question about efficient pricing (they could just buy an index fund and be done with it), but it's a question about distributing returns vs principal.