Don't Let Bernanke Pick Your Pocket!http://www.fool.com/how-to-invest/personal-finance/savings/2011/05/31/dont-let-bernanke-pick-your-pocket.aspx Alex Dumortier, CFA
May 31, 2011
This month, the rate of inflation exceeded the yield on the 10-year Treasury bond for the first time since 2008. That's a negative real yield! Your assets will lose purchasing power with that return. Bill Gross, who manages the world's biggest bond fund, told Bloomberg Television last week: "Savers are being disadvantaged. ... We call [what policymakers are trying to do] pocket picking." Don't let central bankers pick your pocket. Here are a few asset allocation guidelines to avoid just that.
Saving is healthy -- necessary, even. Indeed, during the housing bubble, there was spending on a massive scale, with people borrowing against the value of their home to fund their spending habits. Now that the party is over, U.S. consumers are left licking their wounds ... or balance sheets, as it were.
Avoid cash and government bonds
If you have money in a corporate bond fund that is run by a competent manager who you are comfortable with, that's an acceptable choice.
Favor real assets -- at the right price