Importance of Real Returns Above Inflation and How to Calculate Them

In this episode Derek Moore helps to clarify the difference between a real return (adjusted for inflation) and a nominal return. This is especially important when looking to increase your purchasing power. Plus, Derek simplifies the difference between taking a simple average and a geometric average. The difference may surprise many people. 

What is a real return versus a nominal return?

What is the formula to calculate an inflation adjusted real return?

Difference between a simple average annual investment return and a geometric average annual return

How has gold performed as a hedge historically?

Gold’s real historical returns including inflation adjusted real geometric returns

Gold has gone 30 years plus without providing a positive compounded return

Alternatives to using gold include buying broad index-based ETFs and hedging

The benefits of using options to hedge downside risk.

Mentioned  in  this  Episode:

Myths of 60/40 Portfolio Podcast https://razorwealth.com/discussing-myths-around-the-classic-60-40-portfolio-part-i/

Part 2 Myths of the 60/40 Portfolio https://razorwealth.com/part-two-discussing-myths-around-the-classic-60-40-portfolio/

How Purchasing Power of the Dollar is Eroding Due to Inflation https://razorwealth.com/how-purchasing-power-of-the-dollar-is-eroding-plus-why-inflation-hurts-investors/

Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr