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“Long-Horizon Investing, Part 3: The Riskiness of ‘Low-Risk’ Assets” on Advisor Perspectives

In investing, you can have safe present value OR safe future value, but not both!
Part 3 of my Advisor Perspectives series on long-horizon investing shows why long-term Treasury bonds (or better yet, TIPS)–which the last couple years clearly prove are quite risky on a short-term basis–are in fact the risk-free asset for a long-term goal. Less intuitively, cash and short-term bonds, which are very safe on a short-term basis, are just as risky with respect to a long-term goal. This is true even though they never lose value on a present-dollar basis.
A mountain climber and a mystical financial guru illustrate “The Riskiness of ‘Low Risk’ Assets.”

Finally, special thanks to Joe Tomlinson and Michael Finke for their helpful comments on this article series. The final product is much better for their input.

DISCLOSURES: All content is provided solely for informational purposes and should not be considered an offer, or a solicitation of an offer, to buy or sell any particular security, product, or service. Round Table Investment Strategies (Round Table) does not offer specific investment recommendations in this presentation. This article should not be considered a comprehensive review or analysis of the topics discussed in the article. Investing involves risks, including possible loss of principal. Despite efforts to be accurate and current, this article may contain out-of-date information; Round Table will not be under an obligation to advise of any subsequent changes related to the topics discussed in this article. Round Table is not an attorney or accountant and does not provide legal, tax or accounting advice. This article is impersonal and does not take into account individual circumstances. An individual should not make personal financial or investment decisions based solely upon this article. This article is not a substitute for or the same as a consultation with an investment adviser in a one-on-one context whereby all the facts of the individual’s situation can be considered in their entirety and the investment adviser can provide individualized investment advice or a customized financial plan.

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