Investment Returns

[truongphu]

HeavyDuty and others,

In your opinion, how much one loses to inflation when putting money in 5% return money market saving accounts ?
also, it looks to me that for the past 2 years, the bond index did not gain more than 5%.

thanks.

[truongphu]

sorry for the dup.

[4plexowner]

Supply of US dollars is currently being increased at yearly rate of 11.5%. If you are getting a 5% return on your paper investments you are losing 6.5% of your purchasing power every year.

[truongphu]

wow, 11.5% ? i always thought that inflation is in 3-5% range.
i don’t know if there is anything (not the risky/speculative) out there that would hedge against this 11.5% inflation. please advise. thanks.

by the way, i am thinking of putting some money into office REIT, particularly EOP. what do you guys think ?

[4plexowner]

My real cost of living is increasing by more than 3-5% per year and has been for the past several years.

The real cost of living includes things like energy and food, health insurance premiums and copays – perscription medications – etc – the inflation statistics put out by our government are very creative to say the least.

I like the ‘substitution effect’ which assumes that your grandmother will stop eating hamburger when it gets too expensive – she will substitute dog food for hamburger so her cost of living won’t change.

Another neat trick is to say that computers and cars are costing less and less each year because the technology keeps improving – I guess eventually they’ll be free?

[powayseller]

My mom told me it's never polite to talk about money. Wealth is relative. The more wealth on has, the less one should discuss it. – Perry Chase

I totally agree with that statement, and I regret that I allowed myself to be goaded into disclosing the returns on the sale of my house on another thread. (jg: …So, ps, you're not going forward with your website/forecasting service, since you didn't hit anything out of the ballpark in this run up?)

I should have said, I owned a San Diego home from 2000-2005 so of course I profited at time of sale.  At the same time, I did not leverage this opportunity by putting down less money, nor did I buy rental properties.  So while I benefitted from the timing,  I also underplayed the opportunity.  In the process, I've learned enough that hopefully the next opportunity will not miss me by.

[PerryChase]

Nice to you have you back, powayseller. Well, this is a financial site so percentages is OK. No need to account for every penny.

If anyone will be well prepared for the next opportunity, I’m sure you will be. 🙂

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