Safe Assets??

Submitted by doug@bieniek.us on Wed, 08/26/2015 - 12:08

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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?

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dan royer's picture

dan royer

Wed, 08/26/2015 - 12:17

In Upside investing mode,

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.

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ChrisCowles

Thu, 08/27/2015 - 01:45

@Doug, many readers would

@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

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ChrisCowles

Wed, 09/02/2015 - 21:13

This author suggests that

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...

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