>>...they have to beat the market by 1% every year just to break even...
It's even worse than that.
1% ON TOP of inflation, which is reported as 1.9% but many financial experts say the actual figure is closer to 4% once goods such as energy and food are factored in.
So the hypothetical investor must make ~5% just to break even. Anything less is a loss of spending power. Add 4% to realized losses and the figures can be especially gloomy.
Financial experts most certainly do not say anything like 4% inflation in the US.
Energy is extremely volatile, so it’s annual rate spikes up and down by as much as +/- 25% in any given 12 month period, but over longer time spans it’s close to flat, with US consumer prices driven down by fracking.
Food prices, similarly, are volatile, but have trended flat over long timespans.
Food and energy are going to be a tiny, tiny fraction of consumption for someone living off float from an $8 million windfall; core inflation (removing the volatile food and energy categories) is the right number to pay attention to.
It's even worse than that.
1% ON TOP of inflation, which is reported as 1.9% but many financial experts say the actual figure is closer to 4% once goods such as energy and food are factored in.
So the hypothetical investor must make ~5% just to break even. Anything less is a loss of spending power. Add 4% to realized losses and the figures can be especially gloomy.