[tjwebbnorfolk]

"Risk-free" is a popular shorthand for "The US government won't default". But default is far from the only risk inherent in bond ownership.

Risk is the chance something bad happens to you.

Held for 30 years, bonds are eaten alive by inflation. That's a bad thing that happens to you if you hold bonds for a long time.

[kgwgk]

> Held for 30 years, bonds are eaten alive by inflation.

20-year and 30-year bonds yield 5% today. That's well above inflation expectations.

You can actually buy inflation-linked bonds that are going to pay you 2.5% over inflation for the next 20 or 30 years - whatever happens with inflation.

[tjwebbnorfolk]

You're talking about making a 30-year duration bet that inflation will not increase. If you call that risk-free, then all I can say is I have a very different idea of what risk means.

I'd argue a much better 30-year bet is that somebody like Coca Cola will be able to charge an amount for their product that reflects whatever happens with inflation much better than betting on a fixed rate of 5% that can never increase.

[kgwgk]

> You're talking about making a 30-year duration bet that inflation will not increase. If you call that risk-free

I didn’t say anything about “risk-free” (the closest is the second paragraph but you don’t address it at all).

I was clearly commenting on the quoted sentence “Held for 30 years, bonds are eaten alive by inflation” which has not applied since the seventies, doesn’t seem the best assumption going forward, and has an easy solution as discussed.

> reflects whatever happens with inflation much better than betting on a fixed rate of 5% that can never increase.

If your main objective is to beat inflation, getting inflation + 2.50% with certainty seems an attractive proposition! (Inflation-linked bonds have a “fixed” rate on top on inflation.)

[ty6853]

Indeed. There's always the story of finding stacks of bills in the wall of granddaddies house despite the fact creditors and the bank were up his ass to the bitter end for medical bills.

Given the ever increasing number of people bankrupted by medical bills, divorce, child support, lawsuits, etc we're quickly moving into a world where it might be foolish to expect assets accessible to a brokerage or bank will still be there by the time you need them.