How're you getting to 5% loss YoY due to inflation? Estimates on inflation for the USD rarely top 3% for years during the last few decades [0]. Certainly there might be an uptick this year but extrapolating that to "You'll lose 10k a year if you just hold 200k" doesn't really make sense. And certainly you'd hold that money in index funds which have pretty decent returns or even bonds which don't pay out so much these days but have some returns I believe.
For the last 20 years:
- case shiller shows housing has gone up 4% every year on average
- Big mac index also 4% per year for the last 20 years
- Gas (tax was not inflation adjusted, so gas prices appear to be only 2.5%) but the underlying cost is going up faster than that.
- cars, one of the lowest inflation categories according to the CPI (real actual inflation is 2.7% for the last 20 years)-> pick your favorite car and see for yourself. those quality adjustments aren't worth nearly what the cpi boys say they are.
So, we've already got 3-4% inflation for the last 20 years. Now with the official CPI almost 2% higher than last year, it means real inflation is probably 2% higher as well.
3% + 2% = 5%
Treasuries are at about 1 - 2% and unless you hold the actual treasury, you're taking a pretty big risk if you're going into the TLT right now with very little upside gain.
European bonds are negative.
The highest yielding bonds, aka junk bonds are returning 3-5% but those will dip nearly as hard as stocks when things get ugly (look at the last two crashes 2020, 2018), so you might as well hold stocks.
Stocks are at record high valuations according to the warren buffet indicator.
https://www.macrotrends.net/2497/historical-inflation-rate-b...