An Issue of Investing: Negative Real Returns
Negative nominal rates are becoming normal through several foreign countries, Germany, Japan, Denmark, and others. While negative nominal rates may be a recent phenomena, negative real returns are very common and have been around for years.
When your investment returns are less than the rate of inflation, you lose purchasing power. This article by Dimensional call Negative Real Returns, discusses the difficulties of achieving positive returns during periods of low interest rates. They also propose a possible solution to increase the likelihood of getting positive real returns from the fixed income portion of your portfolio; investing abroad.
I’ve been recommending global bonds for years. There are several advantages to adding global bonds to your portfolio. If you wish to know more about how you may benefit with global bonds, please let me know.
Invest well, Dan