Is There a Safe Way to Beat Inflation?

[symbolipoint]

I originally assumed you were talking about medical tourism (visiting a country with lower healthcare costs to undergo a costly procedure), but now it sounds like you just want to skip out on paying a debt. I’m not sure that’s advisable. At any rate, I doubt that fleeing the country is any more advisable than declaring bankruptcy.

In the spirit of your original question, the highest risk-free return comes from paying down debt if you have it (assuming the interest on the debt is higher than inflation—almost a certainty). If you don’t have any debt, TIPS are probably the way to go, as mentioned.

Right in-line with earlier mention of not spending more than (you know) you need. Difficult to "beat" inflation if you like to spend for more things than you need or really want. (Spend less on 'things', and you'll have more to invest.)

 

[bhobba]

At the bottoms of the past few bear markets 10 year real returns of the S&P 500 were negative. There is a ‘gamblers ruin’ issue if you need to draw on your funds but they are temporarily down 30-50% in value. The 30 year time weighted return may be fine, but having to liquidate risky assets at a trough valuation to buy groceries can destroy wealth

That's a big problem. The best solution I know, is the Donnely Zone System (although not the full solution to the above because you are fully invested when there is a downturn):
https://investingtimes.com/wp-content/uploads/2015/04/The-Zone-System-research-paper.pdf
http://www.investors.asn.au/assets/resources/seminars/2018/Syd-Seminar-November-2018/3-Russell-Lees.pdf

Ignore the commercial part of the above but it was the system I used when I traded (I was a long term trader - tried some others but it suited me best). Austin Donnelly was one of my heroes because what he wrote about actually worked and was a tireless campaigner against investor scams exposing the ripoff of things like trailing commissions. He also, using the zoning system, consistently picked market crashes - its simple but it worked.

To fix being fully invested during a downturn, and that is when you may require the money, sometimes called the failure of portfolio theory, as you get closer to using it, gradually move to a 50-50 mix of cash and shares. You can of course have a 50-50 allocation all the time - it was what I did - I was conservative,

Thanks
Bill

 

[FallenApple]

I originally assumed you were talking about medical tourism (visiting a country with lower healthcare costs to undergo a costly procedure), but now it sounds like you just want to skip out on paying a debt. I’m not sure that’s advisable. At any rate, I doubt that fleeing the country is any more advisable than declaring bankruptcy.

In the spirit of your original question, the highest risk-free return comes from paying down debt if you have it (assuming the interest on the debt is higher than inflation—almost a certainty). If you don’t have any debt, TIPS are probably the way to go, as mentioned.

Oh no, that didn't happen. I'm just saying that if it did, that is what I would do. I'm the type of person that refuses to be slave to financial liabilities. I'm sure that in such a scenario, I would try bankruptcy first, while at the same time packing my bags just in case. It's doomsday scenarios like this that scares me. I had a close call one time, but it was written off as charity. I nearly had a nervous breakdown because of that.

Clearly in the case of a 100k+ medical debt, skipping out on it is a absolute must, even if it means relocation. Why? Well, it saves 100k. Thats why. That's equivalent to a house overseas.

This is why a large emergency fund is so important. In case I need 5 figures of cash to set up a new life, which would actually save me money in the long run. There are several other scenarios that I can think of that's in the same ballpark which can realistically happen to anyone. (e.g imploding economy, job loss etc).

 

[berkeman]

Thread closed for Moderation...

 

[berkeman]

Thread will remain closed. Thanks to all who participated.