Those born right after World War II will earn, on average, a 2.4% real rate of return.
FORBES: Replacing FDR's New Deal With The GOP's Version Of The Great Society
T-bills yield a negative real rate of return now and 10-year Treasuries yielding 4% don't light my fire.
If a very bad event is expected every 100 years, instead of, say, every 133 years, he calculates that the real rate of return on 'safe' bonds could fall from 3.7 per cent to 2.3%.
That is why studies show that for most young workers today, even if Social Security does somehow pay all its promised benefits, those benefits would represent a real rate of return of around 1% to 1.5% or less.
But if, like most of us, you hold your nest egg in a savings account, a money market fund, real estate, or a 401(k) plan then what you care about is your real rate of return, not the inflation rate per se.
In a world where annual inflation is running at a 3% rate (actually more if you think for a moment about your rising healthcare and educational costs), there is an overwhelming demand for a security whose rate of return is a negative real (inflation-adjusted) rate of 3%.
The rate of return on American index-linked government securities (also a real return) is roughly 4%.
So Lack performs his own asset-weighted calculations (similar to the internal rate of return methodology of measuring private equity or real estate fund performance) using BarclayHedge data to measure how the average investor as distinct from the average fund has done.
If your cap rate is 8% you could, of course, wind up with a real return well below that-if a tenant trashes the place or if the house is near a city with a weak economy.
Many developing economies also have positive real interest rates, meaning that you can earn a return on their bonds over and above the rate of inflation.
FORBES: 3 Investment Ideas from Bill Gross's February Outlook
应用推荐