Billionaire Ray Dalio believes risk-averse investors should look to one safe asset class when navigating the “zero-sum” markets.
Dalio, who founded the asset management firm Bridgewater Associates, says Treasury Inflation-Protected Securities (TIPS) are an effective option for middle-class investors because they guarantee a real return.
“The markets are a zero-sum game, and if you’re speculating, you’ll probably be the loser. But these bonds are among the safest asset classes you can find.”
The principal of a TIPS will go up and down according to inflation and deflation, and when they mature, the buyers either receive the increased (inflation-adjusted) price or the original principal, whichever is greater, according to the US government’s TreasuryDirect website. The bonds pay a fixed rate of interest twice a year until maturity.
In a Reddit ask-me-anything session earlier this month, Dalio shot down the conventional wisdom that buying property is a safe investment.
“Real estate is not a safe investment because it can’t be moved, so it can’t go with you, and it’s easy to tax because it can’t be moved, so it’s not the sort of asset that is best to hold in times of great change and when the government needs to get tax money.”
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Featured: Shutterstock/Tithi Luadthong
