Are Note Investments Safe From Inflation Risk?

[Tracy Z. Rewey]

Anyone else getting this question a lot lately?

When we buy notes at a discount our return far surpasses the rate of inflation. In 2020 the average rate of inflation was 1.2%. In the past 20 years the annual average has stayed under 4%. If you are buying notes with an IRR of 8-12% you are pretty protected from inflation risk on your portfolio. While inflation could be on the rise, it is a far reach from surpassing the returns from note investing. You have to go back to the early 80's to see inflation hit 10%.

Would like to get your input on how you like to answer the inflation question.