Negative Interest Rate Policies Are Dangerous To Your Wealth

Negative Interest Rate Policies Are Dangerous To Your Wealth by Chris Brightman, Research Affiliates

Key Points

1. Investors are wise to be concerned by zero and negative interest rate policies promulgated by central bankers, because starting yields predict future investment returns. Zero real interest rates predict zero real returns, and negative real interest rates predict negative real returns.
2. For long-term investors, risk is more about failing to meet wealth accumulation goals than about short-term changes in the price of their portfolios; thus, the more appropriate measure of risk is the estimated probability of reaching or failingto reach the desired or needed long-term real return level.
3. Given the new negative interest rate policies environment, investors may wish to look beyond a traditional 60/40 portfolio to a...
   

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