Safe Assets??

I can not find a definition of what constitutes a safe asset. Risky asset are described as stock or a part of the S&P 500. A checking account or CDs seems safe? What about bonds and TIP?

Comments

Dan Royer's picture

In Upside investing mode, which I believe you are asking about, you set the real rate of return you want to assume about "safe assets" in the Assumptions area. Keep in mind this is a real rate of return. I would think that 0% real is very safe and that 1% real might reflect a position in short term govt bonds or TIPS.

@Doug, many readers would characterize a checking account as unsafe, at least in the long term. Lacking interest, you're guaranteed that it loses value to inflation.

CDs may make enough to cover inflation. Maybe.

Chris

This author suggests that TIPS aren't the safe investment that Bodie suggests they are.

http://www.efficientfrontier.com/ef/903/bodie.htm

And this is Bodie's response:

http://socialize.morningstar.com/NewSocialize/ViewPost.aspx?apptype=0&Po...