Your take on inflation is a good one. How does it impact your personal budget, your bottom line? There are so many ways to calculate the real impact of it, I guess the best gauge is the impact increasing prices have on you and your family.
And yes, you still do have your principal, which is 50% of the investment battle! Remember, the most important rule of investing…Protect thy Principal.
Let’s say you lose 3% to inflation per year, being fully invested in short term T-Bills for three years, waiting patiently for a good idea to surface. And then you hit on one and over the next couple of years, you gain 30%. I’ll take that risk anytime.
Anyway, while you are waiting and given your conservative nature (as is mine), I would stick with BRK-B (great for buy hold investors), index funds and again, short term treasuries (all relatively liquid).
However, if long term interest rates ever get lofty again, (if I remember right, in the early eighties the 30 year T-Bond hit about 15% and I believe prime was north of 20%) I’d jump in for the long haul because that kind of consistent return ain’t bad (the key word being consistent).
I guess all I can say is keep doing what you are doing. Again, no one has all the answers. Trust yourself and your own particular investment style will lead you to another great round of investment ideas.
And don’t sell stuff that is still heading north until it starts going south. Trying to anticipate markets is real, real tough. I just let the trend emerge and hope that I have caught the bulk of the move. Sell the bad stuff, not the good stuff (like your current index funds).
Anyway, it sounds to me like you’re doing pretty well on your own so far and I’d say the best advice you can take is from your inner self. Trust your gut. It’s gotten you this far without any major financial disasters and the more savvy you become, the better you’ll do.
