Here I’m talking about gradual/progressive decline, beyond normal inflation.

In contrast, a sharp decline (discussed in the black-swan blogpost) may precede a V-shape recovery, and is more common at least in my simplistic view not based on any reliable data.

Actually, the protections in the black-swan blogpost also apply here.

A complete and objective assessment would probably rank my asset allocations as

#1 property – SG
#2 property – BJ
#3 property – Cambodia, BGC
#4 SGD or USD cash including CPF
… See also [20]current portfolio4 family livelihood protection, but those other allocations (eg: stocks) are smaller and less prone to long-term gradual devaluation.

So what about a 50% decline in one of these? Some of these assets have the potential to decline even worse, but 50% is a reasonably bad scenario to target. Based on my observations over the last 10-20 years, I feel U.S. and Singapore are fairly resilient, so a 50% decline in my lifetime sounds like low probabilities, but we still need to prepare.

The black-swan blogpost listed top 3 (or more) non-financial protections such as career longevity. However, I need some financial hedges, too.

• Hedge – gold — probably the best hedges against inflation over 100Y
• Hedge – USD or SGD cash and bonds — least volatile, more reliable but susceptible to inflation
• Hedge – US stocks

— legacy planning in the face of lont-term gradual devaluation

If I only leave, say, $1M to my children and grandchildren, then I feel a 50% decline is tolerable. The decline would be gradual and I would have time to liquidate some assets and spend or reallocate elsewhere.

What’s the chance of me leaving more than $1M? Rather low.

— devaluation is always measured against some benchmark, usually against a currency. I suspect that with one exception [3], long-term devaluation is always a local devaluaiton relative to some global benchmark. If this is the case, and if you hold properties or stocks in several locations, you are unlikely to experience devaluation across the board.

What if those locations are heavily correlated (the black thinking hat)? Well, putting on my blue thinking hat, I think yes SEAsia locations might be correlated.  According to this theory, it’s worthwhile to hold some U.S. rental property, but beware the high running cost.

[3] The exception is inflation, not a focus of this blogpost.