Protecting Your Cash Against Inflation Using PP World
Channel: Marc De Mesel
Date: 2018-10-26

Losing 5% per year on my cash position due to inflation is a high price to pay. I realized that eventhough the PP World  (75% Stocks / 25% Gold) does have negative years from time to time, it still makes sense to invest in it, even if my time horizon is only 1 year. 

Average, and therefore expected, returns are 8% per year. If I'm unlucky and hit on that negative year, it's not a big problem as I will just have less money to invest, but was still a bet worth taking, and a good habit to have, not to leave your cash position hanging out in the dry devaluing. 

Especially today now that:

1. We have a small correction this year (YTD -5%) and negative sentiment.

2. After so many bad years for stocks and the PP, with historical low avg returns past 10 years of 5% only last year, and only this year reaching average returns of 9% for past 10 years, odds are high the next few years will be very good as trend for stocks is up, trend for gold down, but since PP has mostly stocks, trend for PP is also up for another 10 years, likely peaking out at avg return of 17% per year by then.

3. Interest rates started rising and we now have a full history to look back at of bottom interest rates (1948) to peak interest rates (1980), back to bottom (2015) and rising again since then, and thus start similar climate of 50's and 60's to look back to and learn from. 


Links:

Sheet with returns: https://docs.google.com/spreadsheets/d/e/2PACX-1vSToqZQThdLCOgRJjRNavcg0qLUNqZXt28HDye-g15g6qk4U1kO289PEUClEFgC2d-M-J51wJFqCI9-/pubhtml
Sheet PDF: https://docs.google.com/spreadsheets/d/e/2PACX-1vSToqZQThdLCOgRJjRNavcg0qLUNqZXt28HDye-g15g6qk4U1kO289PEUClEFgC2d-M-J51wJFqCI9-/pub?output=pdf


Previous videos about the sheet: 

-Historical Returns Since 1928 - Stocks, Gold, Inflation & Permanent Portfolio: https://www.youtube.com/watch?v=QbkDEhFzG8o

-Is This The Perfect Passive Portfolio? 😍https://www.youtube.com/watch?v=4I1cTUMtv7s

-Another interesting video: Real Inflation = 5% - Historical Prices Of New Home, New Car, Oil, Bacon, Chocolate, Soup, ... : https://www.youtube.com/watch?v=FIO06yLUiYI&t