TIPS. Inflation protected sec inst. What to do
TIPS. Inflation protected sec inst. What to do
Tips. VIPIX. They are about 6% of my retirement Money.im reading to get out of them, do I just move it to
TBM. Is there anything else to move the money to.
TBM. Is there anything else to move the money to.
Re: TIPS. Inflation protected sec inst. What to do
Very hard to say, not knowing why you are considering such a move.
Re: TIPS. Inflation protected sec inst. What to do
why? All bonds and bond funds are going through tough times. Unless you are considering a different asset class, it really does not make sense to me.
Erwin
Re: TIPS. Inflation protected sec inst. What to do
I'm assuming you bought them in the first place to have part of your fixed income holdings indexed to inflation. If that's true, and if that's still your goal, then no reason to change.
Vanguard currently lists the SEC yield of VIPIX as -0.69%, which I believe is the yield before the inflation-adjustment is applied. Since I-bonds currently yield 0% real and also provide inflation protection, it might be appropriate to replace any VIPIX contributions in the near future with I-bond purchases (note the $10k annual purchase limit.) That would achieve a slightly better yield for inflation-protected bonds for now. However, it should be noted that as TIPS have been declining in value, the yield of course rises, and maybe before too long the yield of the TIPS funds will surpass the I-bond yield, making it the preferred choice again.
Vanguard currently lists the SEC yield of VIPIX as -0.69%, which I believe is the yield before the inflation-adjustment is applied. Since I-bonds currently yield 0% real and also provide inflation protection, it might be appropriate to replace any VIPIX contributions in the near future with I-bond purchases (note the $10k annual purchase limit.) That would achieve a slightly better yield for inflation-protected bonds for now. However, it should be noted that as TIPS have been declining in value, the yield of course rises, and maybe before too long the yield of the TIPS funds will surpass the I-bond yield, making it the preferred choice again.
Re: TIPS. Inflation protected sec inst. What to do
buy high sell low!
Seriously, you must have bought them for a reason. Stay the course.
Seriously, you must have bought them for a reason. Stay the course.
Re: TIPS. Inflation protected sec inst. What to do
If your reason for owning them hasn't changed, why would get rid of them.
Remember also that you're getting your information (whatever it is you're reading that says to get out of TIPS) second- or third-hand. By the time the information reaches you, it's already been priced into the market.
Remember also that you're getting your information (whatever it is you're reading that says to get out of TIPS) second- or third-hand. By the time the information reaches you, it's already been priced into the market.
Don't assume I know what I'm talking about.
Re: TIPS. Inflation protected sec inst. What to do
I just wanted to make sure there wasn't anything better
I read where john bogle said to get out of tips?
I'm good with staying the course
I read where john bogle said to get out of tips?
I'm good with staying the course
Re: TIPS. Inflation protected sec inst. What to do
TIPS have not fundamentally changed. So unless your IPS is to blindly do whatever John Bogle (or anyone else) says to do--and I'm not sure I actually recall seeing John Bogle actually recommend getting out of TIPS--I'd just stay the course.snowx800 wrote:I just wanted to make sure there wasn't anything better
I read where john bogle said to get out of tips?
I'm good with staying the course
If you want explicit inflation protection (in excess of what you can get with Series I Savings Bonds), there's TIPS and
Don't assume I know what I'm talking about.
Re: TIPS. Inflation protected sec inst. What to do
Made it very easy I will just stick to my plan
Re: TIPS. Inflation protected sec inst. What to do
Did you read the comments about I Bonds, which currently are a better deal than TIPS? You can actually buy $20K per year if you have a living trust. Obviously not an option if all of your portfolio is in retirement accounts. How much are you talking about?
You can get close to 2% in a 5-year CD without the interest-rate risk of TIPS, but of course also without the inflation protection. Having 6% of your retirement portfolio in TIPS provides an almost meaningless amount of inflation protection. Assuming an inflation rate of about 2%, the CD is earning about 0% real. With an SEC yield of about -0.8%, inflation would have to be about 2.8% for the TIPS fund to provide a higher real return than the CD.
Of course having only 6% of your retirement portfolio in the TIPS fund means that its performance will have little impact on the performance of your overall portfolio, so I see no great risk in sticking with it as long as you understand the risks. I wouldn't change my allocation based on what I read, unless the rational was compelling on its own merit. I might test the rational on this forum.
From what I recall, John Bogle doesn't like the negative real yield of TIPS. But assuming 2% inflation, you're also getting a negative real yield on many nominal bond funds as well, which is why JB currently is recommending to increase one's allocation to corporate bonds (vs. the large amount of low-yielding treasuries in TBM). The VG Int-Term Corp. Bond ETF SEC yield is 2.85%, so +0.85% real at 2% inflation, but of course the risks are different.
Kevin
You can get close to 2% in a 5-year CD without the interest-rate risk of TIPS, but of course also without the inflation protection. Having 6% of your retirement portfolio in TIPS provides an almost meaningless amount of inflation protection. Assuming an inflation rate of about 2%, the CD is earning about 0% real. With an SEC yield of about -0.8%, inflation would have to be about 2.8% for the TIPS fund to provide a higher real return than the CD.
Of course having only 6% of your retirement portfolio in the TIPS fund means that its performance will have little impact on the performance of your overall portfolio, so I see no great risk in sticking with it as long as you understand the risks. I wouldn't change my allocation based on what I read, unless the rational was compelling on its own merit. I might test the rational on this forum.
From what I recall, John Bogle doesn't like the negative real yield of TIPS. But assuming 2% inflation, you're also getting a negative real yield on many nominal bond funds as well, which is why JB currently is recommending to increase one's allocation to corporate bonds (vs. the large amount of low-yielding treasuries in TBM). The VG Int-Term Corp. Bond ETF SEC yield is 2.85%, so +0.85% real at 2% inflation, but of course the risks are different.
Kevin
If I make a calculation error, #Cruncher probably will let me know.
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Re: TIPS. Inflation protected sec inst. What to do
Consolidate to Total Bond.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: TIPS. Inflation protected sec inst. What to do
Jack Bogle moved out of TIPS a while ago. Total Bond and Intermediate Tax Exempt for Mr. Bogle.G-Money wrote:TIPS have not fundamentally changed. So unless your IPS is to blindly do whatever John Bogle (or anyone else) says to do--and I'm not sure I actually recall seeing John Bogle actually recommend getting out of TIPS--I'd just stay the course.snowx800 wrote:I just wanted to make sure there wasn't anything better
I read where john bogle said to get out of tips?
I'm good with staying the course
If you want explicit inflation protection (in excess of what you can get with Series I Savings Bonds), there's TIPS and
John C. Bogle: “Simplicity is the master key to financial success."
- Phineas J. Whoopee
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Re: TIPS. Inflation protected sec inst. What to do
Bully for him.abuss368 wrote:...
Jack Bogle moved out of TIPS a while ago. Total Bond and Intermediate Tax Exempt for Mr. Bogle.
I invest based on my needs, not somebody esle's.
In particular, I'm not an 80-something multimillionaire.
Best of luck and health to Mr. Bogle; and to you, too, abuss.
PJW
- TomatoTomahto
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Re: TIPS. Inflation protected sec inst. What to do
And I don't think that Mr. Bogle would say that everyone's asset allocation should be the same.Phineas J. Whoopee wrote:Bully for him.abuss368 wrote:...
Jack Bogle moved out of TIPS a while ago. Total Bond and Intermediate Tax Exempt for Mr. Bogle.
I invest based on my needs, not somebody esle's.
In particular, I'm not an 80-something multimillionaire.
Best of luck and health to Mr. Bogle; and to you, too, abuss.
PJW
I get the FI part but not the RE part of FIRE.