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This is the strategy I'll be taking, although I'm 20 and have little to save as is. If there's a bout of deflation or price/asset decline, keeping money in savings as opposed to 401(k) assets could earn a much better real return. The only reason people don't normally think of this is because this normally doesn't occur.

But there are significant tax savings when using a 401K or IRA, which combined with the long term makes it quite unlikely that savings will out perform.

Plus, you can probably put currency funds into a retirement account. I think that would function the same as holding cash, but I haven't completely thought through it.

Betting on deflation as the path to riches seems to be hardly a prudent strategy, let alone one to bet your retirement on. Yes I 'could' get a great return on investment if I buy that painting in the garage sale of my neighbor and it turns out to be a Monet, that doesn't make it a wise investment.

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