The Long Suffering (longest real drawdowns)

The Long Suffering - The Irrelevant Investor

 

Whats the problem? Noone is crazy enough to use one month tbills as the growth part of their portfolio. Change the financially accepted definition of risk and voila! Clickbait.

 

There’s plenty of retirees still terrified of equities with high allocations to cash and shorter duration term deposits.

 

I think it’s fair to say that inflation risk is a well recognised factor that all investors should take into account, particularly as lifespans continue to increase and the average retirement spans decades.

 

Except inflation risk is not part of the accepted definition of risk free asset.

 

It's part of the return.

 

Cost of Money plus risk?

 

Dealing with the “real world of risk” and without getting bogged down on definitions etc:

Ways of mitigating Deep Risk, probability and cost. Note Inflation has the highest probability of causing great damage but is the cheapest of insuring against:

 

quote..
Bernanke’s conclusions about the effectiveness of QE are not new - nor are they universally accepted, with some arguing the purchases of Treasury bonds and mortgage-backed securities did little to boost the real economy, particularly beyond the initial round of buying in the immediate aftermath of the crisis.

But it amounts to his strongest statement yet about how the Fed should prepare for the next recession - including a recommendation that the Fed maintain “constructive ambiguity” about the possibility of using negative interest rates, and not rule out a tool it might find useful under some conditions.
Ben Bernanke ..

 

Yep

i.e. 3 month term deposits and shopping for best rate every 3 months (which in recent years has seen them tightening the belts)

 

The attachment reflects my spending habits not my income.

I think if people are frightened off equities there is little you can do to convince them otherwise. For some, for whatever reason, there is a deep aversion to shares.

 

I know of several retirees who are severely risk averse. Either burned through GFC (& crystallised losses) or just lack of understanding of equities.

For them, cash is king.

 

Most I know personally outside of the forum over 60 are terrified of equities. Cash and term deposits is mostly what they’re comfortable with. Most have no idea their Super has equity exposure which is good given there’s a growth component unbeknown to them. Others that understand Super have selected the most conservative option with minimal growth. I say nothing and never discuss finances with acquaintances, friends and family. It’s damn right scary how little the vast majority of the population know about investing!

Those here at PC are not representative of the vast majority. It’s easy to forget that at times.

As for me given how I dress and the way I converse those passing me by in the street and who talk to me would think I own nothing. That’s the way I like it.

 

Haha! I often make similar jokes with my partner, telling her people probably think we're unemployed because we're at home most of the time, or that I've been done for drink driving since I ride my bike to the shops and wear the same Kmart clothes for days on end.

It's fun to imagine what people are assuming. Far better to have money than simply look like you do.

 

Rich man can play poor forever, poor man can’t play rich for long.

 

And I am. Been working at it for a long time.