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https://www.advisorperspectives.com/articles/2025/04/23/us-bonds-never-risk-free-never-will
The above article, I believe provides interesting food for thought. It speaks to our latent recency bias, that people often make decisions based on how current things will get projected into the future.
I wonder if things get labeled “risk-free” as a selling point, so that we’ll pay more, own more, beyond it’s real value.
Well it’s got me thinking.
Thanks for the article.
The only risk free thing in life is …
I can’t think of one thing. Can anyone?
This all goes back to the universal truism that mere mortals can’t predict the future. At best we may determine likely outcomes.
The article states “The definition of “risk-free” is complicated; it depends on what you are investing for, the inflation environment and the fiscal outlook.”
In 2021 we were given a real world lesson about bond risk. In the period ending October 31, 2023 some well-regarded total bond funds decreased in value by 14.5% or more. They have not yet fully recovered. I took this to be one in a series of warnings I’ve been given over the recent 30 years.
As noted in the article, “a short-term Treasury could be considered risk-free.” However, most of us would like to own longer term “risk free” instruments, particularly “in times of market turmoil.” It would seem the best we can hope for is “low risk.” Low may mean “only” a 15% decline. That may be better than a 25% decline, but isn’t desirable.
I’ve concluded that I should prepare for periodic declines of 20% or so. Not that I like this, but in fact one can put in place plans to deal with this. One such approach is simply to save more. That might require saving 125% of a target by the date of achieving retirement. Such an approach may reduce the risk of running out of funds in retirement. It also may require working more during the earning years, working longer and delaying retirement, spending less or doing all of these.
I was taught that there is no free ride and no guarantees.
Thanks for the thoughtful comment!
Got me thinking as well. Very interesting. Thanks for sharing.
Kind of reminds me of “guaranteed income.” Also queue the comments of “Nothing in life is risk free,” and other variations on that theme.