Inflation

Warren Buffett expressed his concerns about budget deficits and inflation risk in a recent New York Times op-ed piece. Asset managers at Pictet and Cie which is Switzerland's largest private bank also have concerns about inflation in the United States, and they are backing this view with part of the $60 billion in fixed income assets that they manage. Pictet is committed to periodic purchases of treasury inflation protected securities ( TIPS ) in light of their inflation thesis. Recent and...

Rockingham Retirement, a British retirement income specialist, suggests that inflation could wipe out the spending power of UK pensioners who are receiving fixed income from standard annuities. The Financial Times Adviser article indicates that a 5 percent rate of inflation could erode 40% of the value of an 80,000 pound pension fund within 10 years. In 1975, following the early 70s recession, inflation shot up from 6.3 per cent at the start of the decade to 24.2 per cent. Five years later, in...

The Center for Retirement Research at Boston College has released a study that highlights the need for a greater focus on the use of bonds in retirement. The study indicates that 86 percent of households approaching retirement hold a bank account, while only 33 percent own stocks directly and only 7 percent own bonds directly. The author suggests that the focus on safe, highly liquid accounts that provide a guaranteed return of capital is short-sighted and often risky. The notion of a return on...