The Next 30 Years Won't Be Like The Last 30 Years And Will Impact Your Retirement, LFG Daily - October 23, 2025

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Why Falling Interest Rates Mean You May Need to Take More Risk to Build Wealth

For much of the past two years, interest rates have been high — giving savers something they haven’t seen in a long time: meaningful yield on cash, CDs, and bonds. But that era is likely coming to an end. Over the next year, interest rates are expected to move lower as inflation stabilizes, economic growth moderates, and the Federal Reserve looks to support a softer landing.

That may sound like good news for borrowers and the stock market — and in many ways, it is. But for investors relying on “safe” assets to do the heavy lifting in their portfolios, falling rates can quietly erode future returns and long-term purchasing power.

The Changing Math of “Safe” Money

When rates drop, so does the return on your “safe” investments — savings accounts, CDs, Treasury bills, and bonds. Today’s 5% money market rate can quickly become tomorrow’s 2%. Over time, that matters.

If your portfolio leans too heavily toward guaranteed income, your money may not be growing fast enough to outpace inflation or meet your long-term goals. In other words, while your account balance may look stable on paper, its purchasing power could be shrinking in real life.

The comfort of safety can become the risk of stagnation.

The Inflation Reality: The Next 30 Years Won’t Look Like the Last 30

From the 1990s through the 2010s, we lived in a world of falling inflation and low volatility. Globalization, technological efficiency, and cheap labor kept prices and interest rates subdued. Investors could afford to be conservative — bonds paid decent yields and inflation was quiet.

That world is gone.

Over the next 30 years, the forces shaping our economy are shifting dramatically:

• Deglobalization – Companies are reshoring production and prioritizing supply chain security over cost efficiency.

• Demographics – Aging populations mean fewer workers and rising wage pressures.

• Fiscal Expansion – Governments are spending heavily on infrastructure, defense, and social programs — often financed by debt.

• Energy Transition – The move toward renewables and cleaner energy sources comes with higher upfront costs.

  
  

All of these create long-term inflationary pressure. That means the next 30 years could see persistently higher inflation than the past 30 — even if it’s not runaway.

What That Means for Investors

Higher long-term inflation and lower interest rates create a challenging combination. The assets that feel “safe” — like bonds or cash equivalents — may deliver after-inflation returns that are near zero or even negative over time.

To build wealth and protect purchasing power, investors may need to embrace more calculated risk:

• Equities (Stocks) – Still the best long-term hedge against inflation. Companies with strong pricing power can pass costs on to consumers.

• Real Assets – Real estate, infrastructure, and commodities tend to hold their value when prices rise.

• Alternative Investments – Private credit, private equity, and structured strategies can offer diversification and yield beyond traditional bonds.

  
  

The key is not to chase risk blindly — but to recognize that avoiding all risk can be its own risk in a changing world.

Bottom Line: Don’t Let “Safety” Cost You Growth

As interest rates trend lower, the easy returns on safe money will fade. Inflation, meanwhile, is likely to stay higher than it was in the quiet decades before 2020. That means investors who cling too tightly to conservative portfolios may find themselves falling behind — not because of market losses, but because their purchasing power quietly erodes.

Now is the time to review your strategy, rebalance your portfolio, and make sure your money is working as hard as you are.

Don’t leave your financial future up to chance. Let’s build a plan that gives you confidence today and peace of mind for tomorrow. Click here to schedule a meeting — I’m here to help you take the next step toward financial freedom.

Colin Symons, CIO Lloyd Financial Group

UK inflation surprised to the downside, at 3.8% Y/Y vs. exp. 4%. Core was 3.5% vs. exp. 3.7%. Core good and food prices were weaker.

Oil jumped 5% after the US sanctioned Russia.

Markets were knocked down by a mean Trump tweet, threatening export controls to China on goods containing software. That led to a big de-risking in markets, though much of it was recovered. After market close, Trump said he expected a trade deal to get done.

Recent winners like nuclear and quantum took their turn getting hit yesterday, as all the market hiding places are systematically flushed out.

Primalend, a subprime auto lender, declared bankruptcy. Not the end of the world but another hit in the private debt space.

TSLA missed earnings by six cents but beat on revenue. They did talk up the Cybercab, robots and AI, though. Meh. That’s worth -3%, after being up 75% in the last six months.

Reportedly, the Trump administration is in talks to acquire stakes in several quantum computing companies.

What does it all mean? We had a big de-risking day yesterday as decision-time seems close both for tariffs and the government shutdown. Stock markets seem to be recovering their footing after the selloff but are likely to remain nervous until we come to a conclusion on catalysts.

Don’t leave your financial future up to chance. Let’s build a plan that gives you confidence today and peace of mind for tomorrow. Click here to schedule a meeting — I’m here to help you take the next step toward financial freedom.

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