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I find that I'm somewhat confused by who the advice is targeted at. If the typical yeoman saver is supposed to be someone that never accrues any significant net worth, it's fairly irrelevant whether their $5K in savings does more poorly than some other store of wealth over time. If, instead, we're talking about people accumulating fairly high net worth, I think you'll find that they already store most of their wealth elsewhere. The most obvious categories of wealth store are in their personal homes and in retirement funds, which I would wager is where people with six-figure (but not seven-figure) net worth tend to have the majority of net worth. For people with seven-figure net worth, they will (I think) tend to have business assets, property assets, and diversified paper asset portfolios.
Is there actually some significant subset of people that stores large percentages of their high net worth in banks?
Fewer and fewer because people have caught on that their money will be diluted away if left in banks. Thus, they pursue much more volatile assets like homes, stock portfolios and long-term bonds. This is a problem because when everyone is piling into these assets simply to escape dilution it becomes very hard to tell what is a bubble and what is not. Stocks have been at historically high P/E ratios. So are they in a bubble? Or is it the new normal.
Also, retirees close to retirement generally move to a more bond heavy portfolio, or at least this was the traditional advice. But if you put your money in Vanguard's retiree fund -- https://investor.vanguard.com/investment-products/mutual-funds/profile/vasix#price -- you would have lost considerably to inflation or to alternative stores of value in the last 10 years of artificially low interest rates and high inflation.
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