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-How do you do that? We're looking out for your savings tonight with important tips for protecting your nest egg against inflation.
Right now, the Fed is worried that there's not enough inflation but some day, no doubt, your savings will be worth a whole lot less 10 years down the road.
Joining me now is Zvi Bodie, professor at Boston University and author of the book Risk Less and Prosper: Your Guide to Safer Investing.
Zvi, welcome to the show.
Great to have you here.
It is my theory and I wanna know what you have to say that people don't even remember what inflation is like and are not prepared to even think about what it could do to their portfolios.
-Actually, that's not so true of people who are leaving their jobs and retiring.
They're very concerned about inflation.
You know, they figured they might live another 10, 20, 30 years, who knows? -So, what do they need to be thinking about? What do they need to be doing if they are concerned about inflation? -Well, let's start with safe assets that are fully inflation protected and we need go no further than two things that are extremely important to ordinary people of modest means.
The first is social security.
A lot of people don't realize that if they wait to collect, to start collecting social security benefits until age 70, then each year, the starting benefit will be 8% higher and it will remain fully adjusted for a cost of living.
Now, that's a terrific investment, right? -Well, yes.
-I mean, I think-- -Okay.
So-- -I think a lot of our viewers are well aware of the beauty of waiting and I think they understand that.
-But you've got some insights on actual Investments that will do better in an inflationary environment.
What are they? -Okay.
Well, the most important one is Serious I Savings Bonds.
These are U.S.
government guaranteed highest credit rating, savings bonds that individuals come by in units as small as $50 up to $10,000 per year per person.
Ten thousand dollars per year per person is a lot more than the average American saves and these bonds will-- are linked to the cost of living.
The same way social security benefits are.
Because they end the rate that you get, which is said at the very beginning, it's fixed for 30 years.
Now, at the moment, that rate, they call it the Fixed Rate, is zero.
-What that means is any-- what any money you put in right now, will earn whatever the rate of inflation is.
-Well, I think that is a great insight for so many of our viewers out there who are concerned about inflation and want to know what to do.
Zvi Bodie, thank you for coming on and sharing that information with us.
I appreciate it.
-We'll be right--
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