TIPS

froandfear

Yep, and I'd add that you also have to be wary of the duration risk with TIPS. Many TIPS funds are intermediate-term. So you also have to watch out for periods where inflation is rising and rates are rising, which of course is common. There are very few macro environments in which TIPS are a good short-term investment.

skilliard7

False. TIPS of the same duration have MORE exposure to interest rates, not less.

theawarenessfund

Your math is correct, but there are a few catches that make regular Treasuries attractive: **1. Tax Drag (Big One):** TIPS inflation adjustments are taxed as income EVERY YEAR, even though you don't receive the cash until maturity. This is called "phantom income." Example: If inflation is 3%, your TIPS principal increases 3%, and you owe taxes on that increase NOW (even though you can't access it). Regular Treasuries: You only pay taxes on the coupon (4.75%) annually. **In a taxable account, this phantom income tax can wipe out TIPS' advantage.** **2. Liquidity:** Regular Treasuries have 10x the trading volume of TIPS. Easier to buy/sell without spread widening. **3. Deflation Risk:** If deflation happens (rare but possible), TIPS underperform. Regular Treasuries give you the full 4.75% regardless. **4. Market Already Knows This:** The spread (4.75% - 2.48% = 2.27%) is the market's inflation expectation. If the market thought inflation would be 3.2%, TIPS would yield less to compensate. **When TIPS make sense:** \- Tax-advantaged accounts (IRA, 401k) - no phantom income tax \- High inflation environment (>3% sustained) \- Inflation hedge portion of portfolio **When regular Treasuries make sense:** \- Taxable accounts (avoid phantom income) \- Deflation concerns \- Need liquidity

OnlyAdd8503

Are you not limited in his much TIPS you can buy in a year?

Dalewyn

Another way to look at this is that TIPS secures your *purchasing power*, not your *absolute dollar value*. TIPS will drop in value if deflation hits, but deflation means each dollar has more buying power. Inversely, TIPS will go up in value if inflation hits, but inflation means each dollar has less purchasing power. TIPS protects your purchasing power.

xanfiles

simple answer. There is a risk of deflation with TIPS. I know you read too much mainstream media who are absolutely sure that inflation is here to stay. But there are a few factors that may lead to deflation i) AI (technology is always deflationary) ii) Demographics. If we are shutting off immigrants, our birth rate is too low to keep up with population. iii) Trump chickens out or Supreme court may strongly rule Tariffs are illegal iv) Unemployment and job-losses are deflationary. v) Debt-defaults. Money is printed when loans/credit lines are created. Money is destroyed when loans are paid off or people default (like 2008) So, make no mistake there is a high chance of deflation that people are unaware (due to mainstream media)

xanfiles

simple answer. There is a risk of deflation with TIPS. I know you read too much mainstream media who are absolutely sure that inflation is here to stay. But there are a few factors that may lead to deflation i) AI (technology is always deflationary) ii) Demographics. If we are shutting off immigrants, our birth rate is too low to keep up with population. iii) Trump chickens out or Supreme court may strongly rule Tariffs are illegal iv) Unemployment and job-losses are deflationary. v) Debt-defaults. Money is printed when loans/credit lines are created. Money is destroyed when loans are paid off or people default (like 2008) So, make no mistake there is a high chance of deflation that people are unaware (due to mainstream media or TDS)

zxc123zxc123

"BLS now says CPI and PPI are -100,000% with healthcare basically free. I've made America great again! And now TIPS holders will now be required to PAY the TIPS TARIFF for ripping off the American people. They've been screwing us for so long under Biden. He's the worst president ever. I never sucked Bill Clinton's dick but if I did it would have been way better than Hillary's BJ. THANK YOU FOR YOUR ATTENTION TO THIS MATTER."

gcommbia34

Why? Wouldn't the TIPS still be paying the same (2.48% plus inflation), making it also more valuable if rates drop, because the drop would cause new bonds (both TIPS and nominal treasuries) to pay less? I get that the TIPS would be less valuable if inflation dropped, but not interest rates.

zxc123zxc123

If we're going to factor that then we should also factor in the other end of the scenario? TIPS will adjust too in the case of higher or lower inflation. TIPS won't protect the purchaser the way T-bonds would in the case of deflation, economic downturn, a stagnation environment, market crash, and/or any combination of those mentions. Often times those will happen in combination if not in combination plus in sequence: economic stagnation or market crash -> economic downturn -> deflation. I think at least for OP. This should answer his question well since most folks asking about Bonds vs TIPS on r/investing do so with the intention of adding them into portfolios as a mix/diversifier to stocks/indexes.

pigglesthepup

Interest rate risk. TLT is long duration. It excels during deflation, but vulnerable to inflation + rate hikes. Check out it's returns for 2022. Not saying you shouldn't have bought it. When rates are up is the best time to pick up long duration. 2008 is a great example of TIPS vs nominals and why it's a good idea to hold both: 1) [First half of 2008 was stagflationary](https://cpiinflationcalculator.com/2008-cpi-inflation-united-states/). GDP was going negative and unemployment rising as the economy was deteriorating, but CPI still rising. Primary culprit was gas prices. June 2008 is when a barrel of crude notched its all-time high of $140. Because TIPS are tied to CPI, they increase in value during such inflationary shocks. Investors were piling into TIPS, fearing a return of the 1970s. 2) Lehman was the largest holder of TIPS and when they filed for bankruptcy, they flooded the TIPS market to raise cash. TIPS' lower liquidity drove down their prices. Investors who had bought up TIPS fearing the 1970s were now underwater on a "safe" asset. 3) Lehman's collapse froze up credit markets. Yields on commercial paper spiked. Banks wouldn't lend to each other. The financial sector is the cardiovascular system of the economy. It stops pumping blood (money), the economy dies. CPI collapsed with Lehman because the economy was literally dying. Prices for everything collapsed. Gas went from over $5/gallon to just over $1 in less than six months. The Fed not only slashed short-term rates but bought up long duration bonds (TLT) to get yields down and boost bank balance sheets to get the blood (money) moving again. In sum: TIPS earn extra cash when prices are stupid and long duration nominals protect you when everything finally collapses.

Excaliblarg

Yeah that's a huge point too. If rates drop your regular Treasury becomes way more valuable since it's locked at 4.75%. The TIPS just adjusts down with inflation so you miss out on those capital gains. Fixed rate bonds can really pop when rates fall.

Good_Ride_2508

Why TIPS and SGOV instead of TLT? If I buy TLT ( which I did ), it gives better dividend and higher value when stocks are taking a hit like 2009 and 2020. What is the negative for TLT?

pigglesthepup

You're welcome. All that said, I don't think TIPS are bad but just misunderstood. Captain Chaos wants rates low to run it hot to inflate away the debt. This will leave us ripe for inflationary shocks: *unexpected* inflation. I'm personally switching my SGOV position over to short-duration TIPS (VTIP). Shorter duration minimizes some of the volatility of the above things I listed and buffers against rate hikes (VTIP was only -3% in 2022). However, I am *not* replacing my main holdings of nominals with TIPS.

saltyhasp

Keep in mind too, that TIPS in taxable accounts is a big questionable. There are cases where the cash payout might not even cover the taxes, so they are not always a cash flow generator.

DrXaos

One main risk now is political interference with calculation of honest CPI. TIPS are adjusted to whatever BLS says is CPI, not actual inflation.

MaybeTheDoctor

- TIPS (Treasury Inflation-Protected Securities) - long-term inflation protection - SGOV (an ultra-short-term Treasury ETF) - for capital preservation and liquidity They serve different purposes. I would rather ask, why TIPS and not TLT.

pigglesthepup

TIPS are tied to CPI. TIPS take a hit when CPI crashes. See: 2008. Nominal treasuries rise in value when rates collapse. See: 2008. TIPS have lower liquidity than nominal treasuries. See: 2008. TIPS are great for hedging *unexpected* inflation. Expected inflation in already priced into nominal yields.

AICHEngineer

As far as bond comparisons go for funding future consumption. It actually *is* a better idea for a retail investor who has much higher inflation risk to be buying TIPS rather than nominal long bonds if youre just buying the bond and holding to maturity. The large nominal bond market is useful for major intermediaries pricing assets on the margin who all tend to have nominal liabilities in the future, while our future liabilities are conpletely tied to inflation. There are some downsides, like a less liquid TIPS market.

WhileNotLurking

Because if rates drop, the value of the 4.75% treasury goes up much more than the TIPS that adjusted downward

New-Boysenberry5707

Your asset allocation logic makes a lot of sense especially increasing investments in healthcare, consumer staples, and Treasury Inflation-Protected Securities (TIPS) during periods of uncertainty. These sectors typically buffer well against market pullbacks. How do you usually decide when to revert to growth or cyclical stocks? I'd love to discuss this with you if you'd like.

Own-Character395

I looked at the sectors that went up and the ones that went down, not just today and yesterday, but in the last couple of gyrations. I consider this to be like tremors ahead of the big earth quake that is yet to come and by looking at the tremors you can figure out where the big rip will be. Previously by looking at past crashes I had allocated 4% each to a number of defensive sectors. As a result of the recent gyrations I I'm further over weighting healthcare, consumer staples, energy stocks (to 5% each), keeping my stake in REITS (still 4%) and reducing my stake in utilities and mining stocks (down from 4% to 3% each). I'm also gradually increasing my bond position, particularly in TIPS and, as they fall, in long bonds. Now up to 32% from 30% which itself is up from 20% six months ago. Rest is in broad market indexes, VTI and VXUS

PinkHydrogenFuture7

What would be an example of a specific macro environment that would call for TIPS ?

froandfear

Who is "someone"? Nobody here can answer without knowing your investment profile. Munis aren't going to be in the average investor's profile; they only make sense if your tax situation calls for them. TIPS are for very specific macro environments.

D74248

For a retail investor there is a world of difference between holding a typical open ended bond fund that buys/sells to maintain a duration and holding an actual investment grade bond to maturity. The former exposes you to interest rate risk and is a random walk through the interest rate forest. The latter exposes you to opportunity risk and is a slightly meandering walk to a known destination. The situation with TIPS in 2008 is an excellent example. TIPS are very sensitive to interest rate changes. But if you buy and hold the bond to maturity the zigging and zagging does not matter to you -- you know exactly where you are going to end up in real terms. On the other hand, holding a TIPS fund can be a wild ride with no clear destination. I suggesting taking a look at what a "bond ladder" is, and how it would work for you. The industry does a great disservice to retail investors by explaining how a bond works and then telling us to go and buy a bond fund.

D74248

This is not a binary decision. If you are 15 years out from retirement it might be a good idea to start building out a bond ladder. TIPS should be considered. Nominal Treasuries, TIPS, CDs, Preferred stock, closed end funds — these are all investment vehicles. Investing is not just about VOO and cash.

skobuffaloes

Put all my 401k money in money market TIPS or global securities two weeks ago. Maybe they saw that and decided it was over lol

DelphiTsar

Previous times Gold, but that's overvalued. Real Estate, which is overvalued and seeing a slump. IMHO the only thing that has any chance is bond market. The government will keep trying to prop up the market as much as it can by lowering rates. And trump will get a pick or two soon in the federal reserve. When they lower interest rates bonds go up in value. The risk with bond market is inflation eating the return(IMHO a small return is better than holding on to an obvious crash). If you are worried about bad inflation then TIPS, but I don't think the market has anymore room for crazy inflation. Companies aren't going to increase wages beyond what they are now. I haven't looked at commodity companies/etf's in a while, that doesn't really track the market, but I'm going to guess it's overvalued for what it is, but might be worth looking into. **TLDR, nothing is going to get you S&P500 historical returns but you might be able to hold semi where you are at and wait for the crash to rebalance.**

JonOwn1805

Thats interesting. "buy defined maturity TIPS ETFs" Could you give me some example of these type of funds ?

D74248

TIPS funds do not behave the way that investors often expect. They are very volatile and subject to interest rate risk. Better, IMO, to buy the actual bonds and hold to maturity OR buy defined maturity TIPS ETFs and hold them to liquidation.

Simple_Purple_4600

I bought 10k worth of TIPS but then again I'm 63

ikeepeatingandeating

Bonds are flat today, TIPS are slightly up. Depending on your allocation this week hasn't been that crazy. Week's been hard but hopefully it helps people will learn their true risk tolerances.

pigglesthepup

You want a **short-term** treasury fund. >TIP (iShares TIPS Bond ETF) Crashed hard in 2008 because CPI cratered and Lehman was the largest holder of TIPS at the time and dumped them all to raise cash. Also took a beating in 2022 from the rate hikes because intermediate duration (6 years). Both of these things are visible on TIP's full chart (why do people not look at charts?). A **short-term** TIPS fund like VTIP/STIP will have less volatility. VTIP/STIP returns have been better than BSV (nominal treasuries + investment grade corporates) in recent years because higher inflation. >AGG (iShares Core US Aggregate Bond ETF) Not short-term. Treasury holdings will keep it stable tho. Longer duration treasury funds have "crisis alpha" -- they *rise* in value during deflationary shocks. See the performance of TLT or EDV during 2008, Covid, or even this past April for an example. But they are not short-term. Only put in money you don't need for a long time.

Alone_Owl8485

The most cautious thing to do would be to move everything to an ETF with inflation protected treasuries (TIPS). You will not make big returns but you are also unlikely to lose much in a market downturn. https://etfdb.com/etfdb-category/inflation-protected-bonds/

21plankton

Hunker down with some TIPS and high yield savings accounts, stay put in the market and rotate industries as appropriate. Lower my expectations for growth and cut my spending, try not to buy a new car despite the good deals. Shop yard sales and secondary markets for needed items, rely on cheap hobbies and basic food products and a daily vitamin. Come to think of it I do a fair amount of this already. Clear out that second bedroom that ended up storage because some friend or family member will need it. I lived through the last major stagflation. So far this one is stagflation light but I expect it to get worse.

ErroneousEncounter

TIPS did not do well during the post-pandemic stagflation period. Consumer staples did sort of okay but fell off pretty fast. Same with commodities. Even value stocks drop during stagflation. But you can pick them up at a discount. Energy did the best IMO. Inflation raises energy prices and people have to pay for energy no matter what.

LongDarkTeeTime

I have my cash in VMFXX that is yielding 4ish%. Why not something like that instead of TIPS ( or VTIP ETF)?

Prospero_Ai

Good question. Stagflation is one of those scenarios where basically every traditional playbook falls apart because nothing really works cleanly. The textbook answer is commodities and energy, like you mentioned. Historically those have held up better when inflation stays high and growth stalls. The problem is timing matters a ton. Commodities can be incredibly volatile and if you're early or late by even a few months, you can get wrecked on the swings. Inflation-linked bonds (TIPS) sound good in theory but the real yields have been pretty terrible, and if we're talking true stagflation, you're essentially accepting negative real returns just to not lose as much as cash. Not exactly exciting. Here's what to focus on if stagflation started looking real: **1. Dividend aristocrats with pricing power.** Companies that can pass inflation onto customers and have maintained dividends through multiple recessions. Think boring stuff like utilities, consumer staples with strong brands. Not sexy, but they tend to survive better than growth stocks when everything's ugly. **2. Energy, but selectively.** Not just broad commodity exposure. Look for companies with strong balance sheets and consistent free cash flow. When growth slows, the leveraged players get crushed. **3. Gold.** Everyone rolls their eyes at gold bugs, but in a stagflation environment where real rates are negative and trust in monetary policy is shaky, gold historically does its job as a store of value, we are seeing this play out already this year. **4. Short duration bonds.** If you need fixed income exposure, keep duration short. Long bonds get destroyed in persistent inflation. The harder question is how do you actually know stagflation is starting versus just a rough patch? That's where watching what big money is doing matters. The honest answer is there's no perfect playbook here. Stagflation is brutal because it's a lose-slow scenario across most asset classes. Your goal isn't to win, it's to lose less than everyone else while staying liquid enough to deploy capital when things eventually turn.

watch-nerd

TIPS

No-Associate-6068

You nailed the core playbook. It's all about rotating into real assets and things with pricing power. * Energy/Commodities: Absolutely. You're owning the source of the inflation. Gold is the classic "fear" trade. * "Boring" Value Stocks: I'd look hard at consumer staples (people still buy soap), healthcare, and utilities. Companies that can raise prices and not lose customers. High-growth tech with no profits gets wrecked. * Bonds: TIPS (inflation-linked) are literally designed for this. I'd avoid long-duration bonds like the plague. * Cash: Holding excess cash is just a guaranteed loss of purchasing power.

wjonagan

Yep, Real assets and TIPS have historically been the best defense. I've been slowly shifting some allocation that direction without going overboard. Keeping dry powder for opportunities is underrated advice too, stagflation markets tend to be choppy as hell.

pnw-techie

What historical period had stagflation and also had TIPS?

W_Malinowski

gold first, then energy when things seem like they're going to start improving. would never buy TIPS because the yield is tied to cpi as far as i know, which obviously doesn't reflect the real decline in purchasing power.

Deep_Luck-

Stagflation’s tricky because there’s no clean “win.” Historically, the stuff that tends to hold up best is real assets (commodities/energy), TIPS or other inflation-linked bonds, and strong-cash-flow/value stocks. I wouldn’t panic-rotate everything, though, usually the smart move is staying diversified, upping exposure to inflation-hedges gradually, and keeping some liquidity for volatility.

kiwimancy

Similar, yes. Both are linked to CPI. Series I savings bonds are non-marketable, redeemable at par after 5 years (or with a 3 month interest penalty after 1 year), and have a yearly buying limit of $10k per tax id per year plus 10k more on paper with enough of a tax refund. Rates are set twice a year on a lag compared to TIPS. TIPS are a marketable security that one can buy by the billions if desired.

Immediate-Check7803

I took out all my holdings in companies that donated to destroying the East Wing and put it in TIPS. Now I am rooting for DOG.

MetricT

The best proxy for gold is usually gold miner stocks. For small increase/decrease in gold price, gold miner stocks tend to increase/decrease by ~1.5x. For larger increase in gold price, that's not necessarily true. Gold is getting harder to find, more expensive to refine, so a doubling in gold prices doesn't necessarily translate into a doubling of gold miner stock prices. I should add that, while I rode FSAGX (gold miner fund) to a > 100% return since January, I suspect the "easy money" is gone, so I'm rotating to other assets like TIPS. I'd wait for a crash before piling back in.

neurapathy

TIPS?  Pardon my ignorance. 

MaddRamm

Thank you! Yeah I’m not interested in ETFs but the actual TIPS. Most of my accounts are retirement accounts. I wouldn’t bother with bonds with my one taxable trading account.

D74248

You can easily buy TIPS at any of the major brokerages. TIPS funds do not behave the way retail investors often expect. Best, IMO, to buy the actual bonds and hold to maturity — that way you get the expected result. Or *defined maturity* ETFs, held to liquidation. There are tax complications, so for most of us they are best held in retirement accounts.

MaddRamm

How are you investing directly in TIPS? Government website?

debtmagnet

You don't even need to look to Japan. There's historical precedent in the USA. If you had invested in the S&P500 in 1968, you wouldn't have achieved a real return until 1995. That's a span of 27 years, more than half of a typical working career, without a return. Even if you follow the advice to "wait it out", it's not historically uncommon to be in the red in real terms for extended spans of time: 13 years for dot com, 7 years for the GFC. The uncertainty is part of the bargain of broad market index investing. If you can't deal with it, then you can invest in 5-year TIPS and enjoy your fairly reliable real return of 1.2%.

MetricT

At current overvaluation, the S&P 500 should return an average of *negative 3-4%* per year over the next decade. TIPS are a bargain right now.

Gbank1111

Add to this the yield on long term tips is over 2% I anticipate the market will very likely underperform the TIPS over the coming 10 years

MetricT

I bought gold miners in January.  Up > 100% in 10 months.   Sold the day before gold sold off last Friday. I'm now 50% TIPS/50% cash.  That's how well I think the stock market is going right about now. The stock market is at record overvaluation and the yield curve is normallizing?   Hardest of hard passes.

D74248

Use yo moneys to buy TIPS.

bank_truth

Keep a chunk in your HYSA so you can max out I-bonds early next year. They’re at a 1.10% fixed rate plus inflation right now and don’t swing with market yields. STIP or VTIP dropped when rates spiked in 2022. Buying individual TIPS or defined-maturity ETFs and holding to payout keeps that risk down. SGOV is fine for short-term Treasuries, less rate exposure but no inflation bump. Rates can always rise or fall depending on the Fed. For HYSAs you can check updated rates on our website before moving money.

asml84

Most is invested in Treasury Inflation-Protected Securities (TIPS) - almost cash. My goal is to preserve purchasing power, not more, not less.

ikeepeatingandeating

I've read a boglehead-y approach is to split your bond allocation into half TIPS and half intermediate term bonds if you're nearing retirement. I went 50/50. Seems good enough.

D74248

If you want inflation protection I suggest buying the actual TIPS bonds -OR- defined maturity TIPS ETFs [IBIE is an example]. Hold to maturity/liquidation. However TIPs are usually used for longer term inflation protection, not short term. Typical TIPS funds that maintain a constant duration are volatile due to interest rate exposure. They do not behave the way that retail investors often expect. TIPS bonds held in a taxable account create phantom income since the inflation adjustments are taxable. This can be a PIA at tax time. The defined maturity TIPS ETFs simply this, though the end result is the same. TLDR: Buy the actual bonds or use defined maturity ETFs. Hold to maturity.

D74248

Given the high valuations (not value -- *valuations*) I have shifted to 40/60, increased my international exposure within the equity allocation and have bought TIPS that mature between 2029 and 2034.

gametimevinee23

TIPS TO MAKE MONEY THIS WEEK. Entry is key don't FOMO into a play if you do scalp 10-20% and get going those who entered early should scale out sell 25% of shares at certain level, then another 25% if price move up again called DCA out so you don't sell all at once and can bag higher profit. Then set a stop loss remember a 50% loss needs a 100% gain to break even. Overnight Trading since you can enter trades when most ppl cant even trade, getting in premarket is kind of a disadvantage since people can trade and people have limit order coming through which ruins the whole point of early entry.

pnw-techie

Why are you trashing bonds if your problem is TIPS? That's like 1% of the bond market. It's only for unexpected inflation. You don't want unexpected inflation, so you don't want TIPS to do well. I have never owned TIPS. I have owned bonds for decades. I've made lots of money from bonds. Just by buying BND. That's the normal standard bogleheads pick.

GAV17

> Then why is the dollar declining Because rates are going down, the dollar index is at the same level as before the pandemic when rates where lower than today. It only went higher post pandemic. The Fed has a double mandate, employment and inflation. With employment being trash this year and inflation going closer to the target and rate way above inflation, they decided to prioritize employment. That's not a secret and has been said a ton by them. The rate being above inflation by 100 to 200 bps is an anomaly of the last almost 2 decades. People do not fear inflation, the bought metals because it's a hedge against a possible economic downturn the thing the Fed is worried about. Bonds and stocks are going up because of rates going down, stocks are historically high price while bonds aren't. There's also an error in thinking that the same investors that are buying gold are the ones buying stocks or buying bonds. There's several different opinions about where the stock market is going and where the best hedge is. There's not an inflation fear in the market, thats why TIPS yields have remain constant. They should have gone down otherwise. If you think they are wrong you should buy high duration TIPS.

ConcentrateOk523

No but bonds have done nothing for me the last 9 years. It is frustrating because the US stock market goes up up and all I hear from Tom Lee, Jeremy Siegal, Nancy Tengler, Ed Yardeni and others is how the bull market is intact and going higher. I buy TIPS and of course there is no unexpected inflation. I am better off listening to the people on CNBC. Putting 20 percent of my portfolio in bonds 9 years ago was a huge mistake. The only ones predicting a crash is the people on Reddit. Now I do not know what to do.

SmokeSignalsFinance

I feel that, I diversified Into long duration treasuries awhile back as well so I’ve been seeing returns there but the majority of my thesis is into TIPS.

ConcentrateOk523

Yes I bought TIPS but as usual the minute I buy, nominal bonds outperform. I guess unexpected inflation is not occurring.

Key-Boat-7519

OP, 1.25% AUM is steep; near retirement you can get strong planning for \~0.3–0.7% or a flat annual fee, so I’d keep shopping. Ask any advisor for a written IPS, rebalancing policy, tax-location plan, Roth conversion and Social Security timing, plus withdrawal guardrails; if they can’t show that, move on. If you’re light on complexity, a simple 2–3 bucket setup works: 1–2 years in cash/short Treasuries, the rest split between a global stock index and intermediate Treasuries/TIPS; rebalance yearly and harvest losses in taxable. Flat‑fee CFPs via NAPFA or XYPN are good fits without alternatives/trusts. Vanguard PAS and Facet handled planning well for me, and for the bond sleeve I compared brokered CDs at Fidelity with MYGAs at [gainbridge.io](http://gainbridge.io) to lock in guaranteed yields. Bottom line: pay for planning, taxes, and behavior, not market watching; lower-cost beats 1.25% for most.

rbraalih

TIPS GLD AMMO I'm not joking

D74248

There are of course many approaches. I use actual bonds and defined maturity bond ETFs, always held to maturity. In this case probably nominal Treasuries for years/rungs 1 to 4, then TIPS for years/rungs 5 to 10.

Own-Character395

TIPS Gold (maybe late to that party) REITs Consumer staples Healthcare (maybe, high PE) Utilities (maybe, AI energy craze)

D74248

> What other choice is there A TIPS ladder. Tilting the portfolio towards value. Increasing international exposure.... There are a lot of asset allocation changes that a careful investor can make today if they decide that the S&P 500 is carrying too much risk for the potential returns.

notreallydeep

Barely. CPI is like 3% and inflation expectations as measured by TIPS/note spreads aren't high either. As for the Dollar, that's relative to other currencies. The Dollar's value relative to, whatever, the Euro, doesn't matter for US asset prices outside of companies exporting goods to Europe. But since many US companies do export goods abroad, you're half-right.

FrankDrebinOnReddit

I would not do that. For example gold is down 5.2% today. In 1980 gold fell and took 20 years to recover. Use treasuries (including TIPS if you prefer), treasury ETFs, or money market funds for your emergency fund.

Key-Boat-7519

If you want to retire in three years and keep principal for your kid, start de‑risking now by building a 3–5 year income bucket and letting the rest stay in stocks. What’s worked for me: estimate the Roth’s annual discretionary need, then park 2 years in short T‑bills or a rolling ladder and the next 3 in short/intermediate Treasuries or a TIPS ladder. Keep the equity sleeve broad (S&P 500) and, if you want smoother cash flow, add a slice of VYM or SCHD, knowing they’re still equities. Automate dividends/coupons into cash, rebalance annually or at 5% bands, and spend from the cash/Treasury bucket during downturns so you’re not forced to sell stocks. I use Vanguard’s Target Retirement Income for a simple 30/70 mix and Fidelity’s Treasury ladder tool for 5‑year rungs; for a slice of guaranteed yield in the fixed bucket, gainbridge.io’s fixed annuities have been a set‑and‑forget option. Bottom line: secure 3–5 years of cash flows now, let the rest compound, and refill the cash bucket on good years.

HoldOk4092

TIPS

LeftTesticleOfGreatn

The beauty of bear markets and black swans...they teach many high and mighty traders a lifelong lesson in humility. Covid alone was enough to make the most "900 units, bam! Free real estate!" bulls go on life support and start chasing bonds and TIPS even in this sub. Some of us do have a good risk profile, aka not 100% stocks because...I know myself. And this I could sleep easy, stay invested and DCA during the dip.

Smart-Preferences123

Exactly this. The counter party risk with TIPS is the money printer guys. I think a credit default swap at AIG in 2008 was a safer bet.

anally_ExpressUrself

Furthermore, TIPS pays out based on a number that the US government makes up. These days, if it's the wrong number, you get fired. How much do you trust the government to generate a fair number?

Delicious-Smoke-9783

Finally a real answer in all the doomer bullshit and gallows humor. Continue to buy broad stock indexes. But mix in TIPS or other securities that will beat inflation so that you have some dry powder if we do get a pullback that isn’t crushed by the falling USD. Gold and crypto are not negatively correlated to stock market crashes.

Own-Character395

I am moving to a more defensive position. I was at about 16% bonds and I'm now at 23% on my way to 25%. Not doing it all at once to get an average price. I also diversified my bonds to include foreign bonds (BNDX) as well as TIPS (SCHP for now. May but some directly later.) I was at 1% gold and over the last few months have increased that to 2%. I would like it to be 5% but I'll do that over years rather than but at what might be the high. I have also shifted from about 10% foreign equities to 15% For domestic equities I have shifted to about 15% in "defensive" sectors including consumer staples, utilities, healthcare, and 10% into sectors that sell hard assets(REITs, energy and mining). That still leaves 25% in the s&p which I will keep because any further movement would result in big taxable gains, otherwise I would bring it down to 20%

PleasantTrust522

Nah, they're releasing the CPI report because they need it for the cost of living adjustments of Social Security and payouts for TIPS (inflation-linked bonds) holders. Although I do think it's ridiculous that they're sitting on the employment report (all data already collected during September) and simply not releasing it. Powell was pretty clear that he hadn't seen the number. I do agree with you that the employment report was probably good. Still, can't wait for CPI. If it's bad, the Fed will already be in its blackout period so we might get a genuine surprise at the FOMC meeting. Not likely at all, but possible.

PleasantTrust522

No, the CPI report is officially scheduled for release on Oct 24 despite the shutdown. Some BLS employees have been called back to prepare it, as it is necessary for Social Security cost of living adjustments and for TIPS payouts.

kiwimancy

They should. Real assets like gold and TIPS help diversify a portfolio which contains a large allocation to nominal bonds.

GoldChallenge6287

Among other things. Gold has no “real return” factor - interest, dividends, growth. It’s return is more or less the rate of inflation. This hedge is replicated partially by TIPS, REITs and global equity exposure but over a long timeframe, gold either drastically underperforms equities or outperforms for decade long stretches. So yes, right now it seems like a missed opportunity but over 20-30 years, that 5% allocation may cause a 200bp drag on your ARR.

jart

Three years ago America froze $300b of Russian money held in Western banks. Russia then adopted the gold standard for the rouble. So the US Treasury and London Bullion Market Association banned trading gold with Russia too. This shook up BRICSA and made them all goldbugs. Most of the retail demand is coming from those regions. We're also seeing an outflow from treasuries, which used to be a way for investors to extract surplus value from American labor. Unfortunately the U.S. has been debasing the dollar to fund retirements, which on the spending side now consumes more than half of the revenue that the federal government collects. They can't tell the truth about inflation because retirees all hold TIPS so they'd need to give even more to retirees if CPI went way up. Since US retirees hold more treasuries than anyone else, they're starting to realize they've actually been picking their own pockets and are starting to buy gold. Goldman said a month ago when it was $3500/oz that if just 1% of them do this, then it's gonna go to $5000/oz. The Chinese are promoting their digital yuan as a new international currency, and they recently made it exchangeable for gold, although they peg it at the 200 day SMA so it's in the interests of the U.S. to keep gold prices high to keep the dollar competitive.

oldmanballsacks81

I am glad I rebalanced my 401k from 100% stocks to 50% international, 30% low volatility stocks, rest in TIPS. I am out of US markets until taco is in charge. USD is devaluating rapidly ,inflation out of control, economy in turmoil, AI bubble, people using buy now pay later to buy food wtf.... Had a nice ride for the last 18 years and rode the full bull market and now time to preserve those retirement gains.

ConcentrateOk523

I am stocks and bonds with basically a four fund portfolio and TIPS. I do not believe in gold. My issue is gold does not produce any income and physical gold is just for some dealer to make a huge profit. What would five percent in gold due for my portfolio?

MetricT

It depends on where you work. 403b's are allowed to invest in gold funds like GLD provided your employers chooses to allow that. Mine does not. :-/ I have already written HR a letter asking them to change that policy, because it's a dumb-ass policy. I *do* have TIPS (FIPDX), and bought a bunch today. I'm 50/50 FSAGX/FIPDX now.

weasler7

Ugh. Gold and TIPS is all that is accessible for Fidelity 403b mutual funds??

MetricT

Until today, it was 85% FSAGX/15% FIPDX (TIPS fund) in my main retirement. The market is acting unusually odd today, even by recent standards, so I decided to de-risk, so I'm 50/50 now.

weasler7

I think TIPS is a decent bet. My only concern would be if a political loyalist is appointed to the BLS and juices the CPI numbers

Aureliamnissan

It is generally treasury bond holders, but [this explains it](https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/) > The national debt is the amount of money the federal government has borrowed to cover the outstanding balance of expenses incurred over time. In a given fiscal year (FY), when spending (ex. money for roadways) exceeds revenue (ex. money from federal income tax), a budget deficit results. To pay for this deficit, the federal government borrows money by selling marketable securities such as Treasury bonds, bills, notes, floating rate notes, and Treasury inflation-protected securities (TIPS). The national debt is the accumulation of this borrowing along with associated interest owed to the investors who purchased these securities. As the federal government experiences reoccurring deficits, which is common, the national debt grows.

Hopperkuh

Since you cannot buy Gold, you’d use **TIPS (Treasury Inflation-Protected Securities)**. They don’t move the same way, but they *do* protect you from inflation and dollar devaluation risk.

curious_investing

There must be some sort of bond option, however limited, in your 403b. You could check to see if your plan allows you to take any of your money out of your 403b (assuming you aren't yet 59.5) and move it to a Traditional IRA. Then you would have all the options you need. I've created a TIPS ladder that, along with a small pension and SS at 70, will give me the necessary income floor through 2055. While there is always the small risk of deflation, the TIPS assures that a portion of my investments will keep up with inflation. The TIPS ladder , and nominal bonds that will cover 3 to 5 years of equity withdrawls in a down market, have also eased my mind so that I can keep 70 to 75% in equities no matter what happens.

ikeepeatingandeating

I'm "lucky" that my retirement is coming up, so my planned increase in fixed income coincides with a lot of current fear of a market crash. My plan was always to go from 20% to 30% fixed, 2 years of expenses in cash and 5 years in bonds. My "flight to safety" was to pivot half of my bonds into TIPS, and half into intermediate duration bonds (vs. longer duration, say BND or similar). I'm a dumb, but I'm making a tiny bet that TIPS could compensate for inflation and/or dollar devaluation, while still being in line with my overall investment strategy. I'd love to have holes poked in this plan.

kiwimancy

Sure you would. If CPI increases in a one-off event, TIPS will increase in nominal value by that amount.

therealjerseytom

> I want to invest in something that's going to be inflation proof or hold it's value TIPS. They are bonds specifically out there to be adjusted for inflation, and maybe a small real return on top of that. Exactly what you're looking for.

Ashhh1991

This is the correct answer that matches EXACTLY what you asked for. Keep in mind that you may still need to pay taxes on your profit, which may make it so that you lost money. Treasury Inflation-Protected Securities (TIPS) * **What they are:** Treasuries whose *principal value adjusts with inflation* (CPI). * **How it works:** The bond’s face value rises with inflation, and interest payments are based on the new amount. * **Pros:** Direct inflation protection; backed by the U.S. government. * **Cons:** Taxable inflation adjustments (even before maturity) unless held in a tax-advantaged account. Anything else (Gold, Bitcoin, Stocks etc) is not guaranteed to match inflation.

skilliard7

recession hedge - 20 or 30 year US bonds stagflation hedge - 5 year US TIPS Aiming for high returns without too much exposure to AI- REITs and some international stocks.