Inflation-Linked Bond in 401k or i series bond with treasury

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
manuvns
Posts: 640
Joined: Wed Jan 02, 2008 2:30 pm

Inflation-Linked Bond in 401k or i series bond with treasury

Post by manuvns » Thu Oct 12, 2017 3:33 pm

Should one buy Inflation-Linked Bond in 401k accounts when treasury offers i series bonds with no loss of principal .
I have lost money on my cref bonds https://www.tiaa.org/public/pdf/ffs/194408506.pdf where as treasury i series bonds continue to beat it .

venkman
Posts: 239
Joined: Tue Mar 14, 2017 10:33 pm

Re: Inflation-Linked Bond in 401k or i series bond with treasury

Post by venkman » Fri Oct 13, 2017 12:26 am

manuvns wrote:
Thu Oct 12, 2017 3:33 pm
Should one buy Inflation-Linked Bond in 401k accounts when treasury offers i series bonds with no loss of principal .
I have lost money on my cref bonds https://www.tiaa.org/public/pdf/ffs/194408506.pdf where as treasury i series bonds continue to beat it .
I would definitely not put money into any TIPS fund with a .63 expense ratio. With where rates are now, that's guaranteed to lose to inflation. I-bonds can only be purchased in a taxable account (I'm pretty sure about that), and you can only buy up to 10k per year. The rate on I-bonds is 0% real right now, which is also guaranteed to lose to inflation after taxes, but not as badly as that CREF fund.

What does your overall portfolio look like? Stocks are generally a good hedge against moderate long-term inflation. And (non-inflation-linked) short-to-intermediate term bonds will respond relatively quickly to rising inflation. You don't necessarily need inflation-linked bonds to be protected against inflation.

aristotelian
Posts: 2824
Joined: Wed Jan 11, 2017 8:05 pm

Re: Inflation-Linked Bond in 401k or i series bond with treasury

Post by aristotelian » Fri Oct 13, 2017 6:53 am

I like I bonds so as to preserve space for stocks and total bond in the retirement accounts.

manuvns
Posts: 640
Joined: Wed Jan 02, 2008 2:30 pm

Re: Inflation-Linked Bond in 401k or i series bond with treasury

Post by manuvns » Fri Oct 13, 2017 10:18 am

thanks for the reply . i am 75% stocks 18% bonds ( half Prudential total return and half cref inflation linked bonds) and rest in real estate
venkman wrote:
Fri Oct 13, 2017 12:26 am
manuvns wrote:
Thu Oct 12, 2017 3:33 pm
Should one buy Inflation-Linked Bond in 401k accounts when treasury offers i series bonds with no loss of principal .
I have lost money on my cref bonds https://www.tiaa.org/public/pdf/ffs/194408506.pdf where as treasury i series bonds continue to beat it .
I would definitely not put money into any TIPS fund with a .63 expense ratio. With where rates are now, that's guaranteed to lose to inflation. I-bonds can only be purchased in a taxable account (I'm pretty sure about that), and you can only buy up to 10k per year. The rate on I-bonds is 0% real right now, which is also guaranteed to lose to inflation after taxes, but not as badly as that CREF fund.

What does your overall portfolio look like? Stocks are generally a good hedge against moderate long-term inflation. And (non-inflation-linked) short-to-intermediate term bonds will respond relatively quickly to rising inflation. You don't necessarily need inflation-linked bonds to be protected against inflation.

venkman
Posts: 239
Joined: Tue Mar 14, 2017 10:33 pm

Re: Inflation-Linked Bond in 401k or i series bond with treasury

Post by venkman » Fri Oct 13, 2017 11:51 pm

manuvns wrote:
Fri Oct 13, 2017 10:18 am
thanks for the reply . i am 75% stocks 18% bonds ( half Prudential total return and half cref inflation linked bonds) and rest in real estate
Real estate is also a good inflation hedge. I don't know what choices you have for bond funds, but the biggest predictor of returns within a given credit/term category is the size of the expense ratio (lower ER = higher returns).

Post Reply