This sentiment is often erroneously attributed to Albert Einstein (https://quoteinvestigator.com/2019/09/0 ... 8%2C876.80.).

Even lacking the endorsement of the sage, compounding truly does produce fantastic results over multi-decade periods.

A stock investment held for 10 years returning 10.0% annually turns $10,000 into $26,000.

Over 20 years, $67,000.

Over 30 years, $175,000.

Back to TIPS.

Inflation is the 8th terror of Hades: compounding put in the

**.**

*denominator*Let’s take 4% as an uncomfortably high but plausible rate of inflation over the long term under moderately unfavorable circumstances in a developed country like the US.

After 10 years, inflation at 4% turns $10,000 in cash into $6,650 real.

After 20 years, you have only $4,400 of spending power.

After 30 years, $2,940.

**Conclusions**

1. The point of owning TIPS is best fulfilled by long TIPS—the longer the better, up to your life expectancy and a cushion.

2. Owners of SPIAs may wish to protect themselves with a TIPS insurance policy: an abbreviated ladder that commences, say, 10 years after the SPIA was taken out, and continues at least to joint life expectancy. Inflation is the ravager of the SPIA.

As a case in point, consider our own Taylor Larimore, who took out a pair of SPIAs early in his 80s, seventeen years ago. Consumer prices have gone up 48% in the interim; his payments, which will continue for as long as he lives, have already lost one-third of their purchasing power.

Had Taylor taken out the SPIA ten years earlier, in his early 70s, a more typical beginning age, his (smaller) payments would now have lost 50% of their purchasing power.

And that was over a 27-year period with one of the lowest inflation rates seen in the modern US, at only 2.6%.

I personally intend to annuitize some of my TIAA accumulation in my mid-70s.

And I will certainly lay in a stock of long TIPS as reinsurance on that “insurance” purchase.