‘Income Dream Come True’: Savers Have Several Risk-Free Ways to Beat Inflation
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Beating inflation may not be as hard as you think. Many savings products and fixed-income investments are offering positive real yields — meaning that their annual percentage yield (APY) is higher than the rate of inflation. This is actually a fairly rare occurrence in the grand scheme, allowing savers to beat inflation with a risk-free investment.
Even though rates on some savings products have dipped slightly since the end of last year, safe investments are highly attractive right now because real yields are still very strong, experts say.
The U.S. aggregate bond index, a compilation of high-quality investment grade bonds, is yielding 5.28%, and the highest 12-month certificate of deposit (CD) annual percentage yields (APYs) are just a hair lower at 5.25%. Those yields are much stronger than the annual inflation rate of 3.5%, according to the latest consumer price index (CPI) reading.
“It's the first time in a long time that investors have been able to earn risk-free income above that forecasted inflation,” says Matthew Miskin, co-chief investment strategist at John Hancock Investment Management in Boston. “This is a retirement income dream come true."
