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This episode of W.I.T. from John has me thinking about how inflation and interest rates are connected, and how it is important to incorporate the past when making assumptions about the future.
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Inflation is definitely a bigger issue for financial planning today than in the recent past, but if we are going to adjust inflation outside historical norms we need to think about adjusting investment returns as well.
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Three Things Worth Sharing
- Are human beings are terrible at assessing risk? This author opines yes when considering things from air travel to pregnancy risks:
“The lists of banned foods for pregnant women is absurd, without a doubt designed by malpractice attorneys making sure no risk, however small, goes unstipulated… And yet riding in a car doesn’t make any list of pregnancy dangers.”
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No one wants your Beany Babies - Sure, your cousin’s vintage Corvette or your brother’s baseball card collection might be a good investment…but probably not. Even ‘serious’ collectibles like art or stamps by definition must underperform the economy because they produce no cash flow and only grow by appreciation. Stock and bonds have cash flow in addition to appreciation, which is why they can outpace the economy. So while you might love your deep fuchsia platypus - don’t think of it as a moneymaker (sorry Megan!)
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Just for Fun - This pre-pandemic New York Times article about how these days Jimmy Buffett doesn't live the Jimmy Buffett lifestyle gives both insight into the difference between perception and reality (and maybe gives us pause to spot-check what is really important to each of us in our own lives) but also - considering the lousy weather this spring in Wisconsin – a welcomed brief escape to ‘Margaritaville’.
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