Admit it-at times over the last couple of years your commitment to allocating a large portion of your portfolio to risky securities has been shaken to the core. Perhaps, you might have thought that you could get along just fine over the long run without exposing your portfolio to risk.
Via Mebane Faber’s World Beta and Ned Davis Research, comes a nice reminder of one of the primary reasons to invest: preservation of purchasing power.
Due to the impact of inflation, the purchasing power of the U.S. dollar has declined by 94% over the last 76 years!
Alternatively, you could have invested in stocks or bonds and have preserved and increased your purchasing power.
It is funny how the concept of “safe” and “risky” change when the effects of inflation are taken into account.
Posted by Andy Hyer 
