≈ The biggest obstacle and the only hope. ≈
[…] How do I save well? What should I put my saving in? When thinking about what you should put your saving in, realize that the least risk investment-that you think from volatility is the least risky investment, which is cash-is the worst investment over a period of time and you could judge that by judging the rate of inflation in relationship to the after-tax income you’re going to earn […], so you have to move into assets that are going to do better over a period of time.
— Ray Dalio for Yahoo Finance, February 2019 —
The era of hiding money under the mattress is over. Mattress is for sleeping, not saving.
According to Ray Dalio, on that same interview, the last experience you had is the one that is going to stick in your mind. We can assume, therefore, that it is going to shape your experience from that moment on. His parents went through the Great Depression and stayed away from the stock market. Because of that, they’ve missed out the boom that came after, the same boom that made Warren Buffet a fortune.
If you want to stay out of the madness of the stock market and keep your savings under the mattress, before you do that, take a good look at the Chart of the Day. That is a lesson on how to devalue a currency over time (Coach Matt loves and also hates that chart, by the way).
If you spend your heydays suppressing all kinds of risk, in regards to your savings, you are essentially piling up all implicit risks for when that awkward age comes, the one that you are so old everything hurts.
The opposite is also true. If you take all risk now, without any sound management, you won’t get to your retirement age in one piece.
Risk is, at the same time, our biggest obstacle and our only hope.
Chart of the Day: Dollar Purchasing Power (1913–2017)
That is a free lesson on how to destroy a currency over time. The mattress era is over. Embrace risk.
Video of the day: Ray Dalio gives 3 financial recommendations for millennials
Founder, Chairman and Co-Chief Investment Officer of Bridgewater Associates Ray Dalio talks to Julia La Roche in 2018 of Yahoo Finance about the value of savings and investing.
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Originally published at https://tackletrading.com on May 2, 2019.