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Can Short-Term Safe Investments Keep Pace with Inflation?

Thursday, March 11, 2010 - 12:57 PM
Many experts say that stocks are the only asset class that can out-pace inflation over the long term, and that any safe cash savings will fall behind. This Bogleheads thread lists some inflation, 6-month T-Bill and 6-month CD history for the last 46 years that show that cash may not be as bad as the experts have led us to believe.
Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
Rep Points: 125,708
1. Thursday, March 11, 2010 - 3:46 PM
That is what you usually hear with retirement advice.  That CDs and safe investments cannot garner enough of a return by the time you retire.  The thing that is missing with these type of investments than stocks is the capital appreciation factor.  You are solely relying on interest payments with these super safe investments.  While they can follow the interest rate trends over many years, your ability to earn above the current inflation rate is virtually nil.  But if protection of principal is your main concern, then stocks just won't cut it.
AnonymousAnonymous2,282 posts since
May 9, 2010
Rep Points: 3,963