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On this episode of Intelligent Money Minute, we interview Larry Siegal, the director of the CFA Institute Research foundation on how to invest in a world of negative interest rates. Most environments feel unprecedented, but until 2019 there have never been negative interest rates. What does this mean? Essentially, it means locking in a guaranteed loss over long periods. How does one invest when the riskless rate is negative? Larry suggests that investors could either take more risk or budget for lower returns. According to Jack Bogle, the better of those options is to budget for lower returns. This requires one to save more and spend less.
We’ll be interviewing Larry on upcoming Intelligent Money Minute podcast episodes, so be sure to subscribe if you haven’t already. Larry mentioned that the world’s population growth explosion looks to taper off this century, leading to more prosperous countries and individuals, which should allow us to solve some of the environmental enigmas that we currently face.
History doesn’t repeat, but it often rhymes. You can either take more risk and hope equities goes up, or you can budget for lower returns. The prudent investors will save more and spend less, and these are the principles we teach our clients. We’d be honored to have you consider becoming a client. To learn more, please visit Get Started.
Larry Siegel Bio
Laurence B. Siegel is the Gary P. Brinson director of research at the CFA Institute Research Foundation and an author, consultant, and speaker on investment management and economics. Before retiring from full-time work in 2009 he was director of research at the Ford Foundation and, before that, head of research at Ibbotson Associates (since acquired by Morningstar). He attended the University of Chicago (BA 1975, MBA 1977). His book, Fewer, Richer, Greener, has been published by Wiley and is available, along with his other work, at https://www.larrysiegel.org.