How much risk-taking is required to beat inflation?

Fabian Scheler

May 3, 2024

Can risk-free deposits and government bonds alone shield an estate from a gradual decline in purchasing power, or is buying equities a must? We took a dive into the data.

7 Minute Read

The Reddit crowd may be attracted by moonshot bets, but for wealthier investors, preserving capital is frequently a more important concern than the accumulation of even greater riches. For years, the highly expansionary monetary policy following the Great Financial Crisis reflected in low or negative interest rates turned this task into a challenge. Today, investors are cheering for the return of significant interest rates, but a jump in inflation is blurring the picture.

  • For wealthier investors, capital preservation often outweighs the pursuit of greater riches, particularly in volatile economic climates.
  • Years of expansionary monetary policy post-Great Financial Crisis led to low or negative interest rates, posing a challenge for preserving wealth.
  • Despite the recent return of significant interest rates, concerns over their persistence and inflation complicate the investment landscape, affecting strategies for wealth preservation.
  • Achieving real wealth preservation is possible and does not require aggressive risk-taking but can be achieved with a fairly defensive combination of close-to risk-free investments with riskier assets.
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