If the client said he wants to “maintain the real value of his portfolio during his retirement”, does it mean when he dies, the portfolio should be the at least the same at the beginning of day plus inflation effect? Thanks.
yes. though a more correct answer would be to not just add inflation but account that the effects of loss due to inflation are compounded.
Example:
Inflation is 2% per year. Over a 20year period this comes to 1.02^20=1.48595–>48.59%. This is additional return required in order to maintain the real value of the asset.
Basically the ending value should be=Beginning value*1.48595.
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