Interest rates, both nominal and real (
i.e. after inflation), are incredibly low, but other measures of financial conditions are less benign.
Not exact matches
Back in May, my main argument in favor of gold was a benign monetary regime,
i.e. low to negative real rates, or interest rates
after inflation.
If an investor told you they wanted a 3 % real return (
i.e., return
after inflation) on their investments, do you consider that conservative?
It is instructive to note that in the last eight years New York State has increased educational spending by 102 percent in real terms,
i.e.,
after accounting for
inflation.
For certain models (
i.e., AMG) which have no spare tire, Roadside Assistance provides
inflation of a flat tire
after using the vehicle's TIREFIT puncture sealant.
Back in May, my main argument in favor of gold was a benign monetary regime,
i.e. low to negative real rates, or interest rates
after inflation.
Historically, real earnings (
i.e.,
after adjusting for
inflation) have consistently grown 1.5 % to 2.0 % per year when taken over a decade.
For example, when a finance professor at Spain's IESE Business School examined how a 90 % stocks - 10 % bonds portfolio would have performed over 86 rolling 30 - year periods between 1900 and 2014 following the 4 % rule —
i.e., withdrawing 4 % initially and then subsequently boosting withdrawals by the
inflation rate — he found not only that the Buffett portfolio survived almost 98 % of the time, but that it had a significantly higher balance
after 30 years than more traditional retirement portfolios with say, 50 % or 60 % invested in stocks.
I have tabulated the amounts withdrawn when one removes 4 % of his portfolio's current balance
after adjusting for
inflation (
i.e., using real dollars).
Remember, too, that
inflation is running at nearly 2 % in Canada, so that real returns (
i.e. the returns
after inflation) are considerably lower than what is being depicted here, as well.
If the rate were a full 2 %, you'd have prices 10.408 % higher
after 5 years, thanks to the compound nature of
inflation (
i.e. 1.02 ^ 5 = 1.10408.)
If an investor told you they wanted a 3 % real return (
i.e., return
after inflation) on their investments, do you consider that conservative?