Imagine this scene. Zvi Bodie describes a debate between him and Jeremy Siegel moderated by Paul Samuelson about the degree of long-term risk in equities.
It would be a Micky Mantle/Ted Williams-type matchup (moderated by Babe Ruth) for many Fi360 Conference attendees at the firm’s annual gathering in Nashville on Thursday afternoon.
Although the debate took place many years earlier, Bodie, a financial consultant, educator, and Professor Emeritus at Boston University, used the episode to make a larger point about risk.
“Risk isn’t the probability of a shortfall, but the probability of a shortfall multiplied by the damage it can do,” he explained. “I think the belief that stocks are not risky in the long run (or over a significant time horizon) is a religious belief, and it’s incredibly frustrating.”
It was why he made a strong case for Series I savings bonds.
“I want to start with a pitch for I bonds because I want to make sure it has maximum impact. I believe every American should unquestionably hold their reserve funds [emergency funds] for when they lose a job, are unemployed or something else unforeseen in I binds.”
The reason, he says, is that they’re inflation protected, tax-deferred, fully liquid after one year and are Treasury-sponsored and can only be purchased through the government agencies website.
“I’m such a fanatic, I’m constantly buying them for my grandchildren at their birthdays, graduations, etc. Yes, they are limited to $10,000 per year, but that’s more than most lower-income individuals and families will save in a year.
He adds they have a 30-year maturity, pay 0.5 percent plus the real inflation rate as determined by the Consumer Price Index (CPI).
For those interested in more information or to purchase Series I Treasury bonds, visit TreasuryDirect.gov.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of 401(k) Specialist and Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots. Experienced financial services content executive specializing in creative new media delivery. He joined the American Retirement Association in 2023 as Chief Content Officer, overseeing communications for the organization, as well as its sister organizations.
