Episode 2 of 6
The Inflation Threat
Carla's money market is earning 4.8% — but inflation is running at 3.2%. Her real return is 1.6%. The model shows what happens to her purchasing power over 30 years of retirement if she stays in cash.
Key Insight
At 1.6% real return, Carla's $480k in cash will have the purchasing power of $288k in 30 years. A 40/60 portfolio with a 5.5% real return preserves purchasing power at $480k equivalent and grows to $1.28M nominal. The inflation cost of fear is $990k over 30 years.
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