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Conservative investors are slowly losing their buying power. They are like frogs in a pot of water that is being gradually
heated. They never notice the fact that they are progressively going broke. They are in a race between the poorhouse and the
funeral parlor.
The flame under the conservative investment strategy is a combination of inflation and taxes. Inflation decreases the amount
of anything you wish to buy. In 1953, you could buy twenty-three US Post Cards for twenty-three cents. Today you can buy one.
In 1953, you could buy twelve candy bars for sixty cents. Today, you can buy one. Gas was thirty cents a gallon, now it’s
over two dollars a gallon. As costs rise, your ability to buy anything with a fixed sum of money declines.
The standard assumption is that the U.S. inflation rate is twice what the Government reports. There are those who believe
that the inflation rate is three times the Government inflation rate. In recent years, the Government has reported an inflation
rate of three percent. Thus, Americans are losing their buying power at over six percent per year.
While taxes vary by State a combination of State and Federal income taxes are about forty percent of earnings. To breakeven,
an investor needs a ten- percent return on investment. You can’t earn ten percent from bank deposits or bonds. Thus,
over a period of years, your money isn’t safe in conservative financial instruments.
Any alternative to a conservative investment strategy increases the risk of losing your venture capital. However, you are
a certain loser if you leave your money in a bank account or T-Bill.
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