[CameronNemo]

Why? What if I buy stocks with the intention of preservinpreserving wealth rather than growing my net worth? In such a case I am just trying to keep up with inflation with as little risk as possible, but the tax policies in place are forcing me to take on more risk. I can't just take a stake in a basket of goods and call it a day. I have to beat the risk free market substantially.

[imtringued]

Assuming 5% inflation with 0% returns for 50 years and a 20% capital gains tax $1 turns into $11.47, a rise by $10.47, therefore you owe $2.09 in taxes. $11.47-$2.09 = $9.37.

You rightfully expect $11.47 but you instead get $9.37 after taxes. Your wealth has shrunk to 81.6% of its original value, meaning you need to net a return of 22.4% over 50 years to break even, which is equivalent to a 0.4% gain every single year or a 0.4% loss every single year.

If you could find a 4.7% interest savings account you would beat the perfect savings vehicle.

In practice inflation is laughably low right now. With current inflation (2.5% yes it's an overestimate) you would lose 14% of your savings over 50 years.

You're right that this is forcing you to take on more risk, but not substantially. You may need to put 10% of your money into the least risky stocks and keep 90% in a risk free asset.

[tartoran]

With that return your risk may be 0 but a guaranteed loss is what you choose. If you want to preserve wealth and want to beat inflation go with mutual or index funds, they go up and down with the market and the market beats inflation and appreciate quite a bit more. Or bonds.

[CameronNemo]

All of those are what I had in mind. All of those incur capital gains tax, with the exception of perhaps some govt bonds (which have low yields).

[imtringued]

Specifically, look out for funds that specialize in low volatility. Their gains are lower but so is the risk.