Inflation “Touches” Principal Even When You Don’t

May 2016 //
Investing
Inflation

It is a mistake to think it wise to “not touch principal,” because (1) inflation will be “touching” (eroding) your principal anyway, and (2) a preoccupation with yield-oriented investments can lead to under-diversified and sometimes overpriced portfolios.  It is better over the long term to focus on the prospects for higher total returns that come from diversified portfolios of attractively-priced investments.