Episode 182: When Disaster Strikes… Should You Invest?

In this episode of Retire with Style, Wade Pfau and Alex Murguia explore alternative investments with a focus on natural resources, commodities, and catastrophe bonds. They break down the strategies and risks behind these asset classes and examine how they can fit into a diversified retirement portfolio. The conversation offers insights into the potential advantages and challenges of these investments for retirement planning.

 

Takeaways

• Natural resources include timberland, farmland, and water rights.
• Commodities can serve as an inflation hedge but are volatile.
• Catastrophe bonds transfer natural disaster risk to investors.
• Investing in companies that use commodities may be more beneficial.
• The correlation of commodities to equities is generally low.
• Catastrophe bonds can provide uncorrelated returns to the market.
• Investors should consider the expected return for each asset class.
• Due diligence is essential when exploring alternative investments.
• Infrastructure investments can offer stable returns through usage fees.
• The role of portfolio managers is to expose investors to asset classes with favorable risk-return profiles.

Chapters

00:00 Introduction to Alternative Investments 02:22 Exploring Natural Resources and Commodities 11:53 Understanding Catastrophe Bonds 21:18 Evaluating Risks and Returns in Catastrophe Bonds

 

Links

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This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”