TIPS

greytoc

Pretty much all 401k plans will have a cash equivalent. In your case, it's a stable fund which is Putnam Stable Value Fund. Stable funds use insurance in the form of GICs and wrap products. They can be favorable in low interest rates environments. But not so much at the moment. The short-term bond fund VTAPX looks like it's indexed to 0-5 year TIPS. So you would hold that investment for about 2.5 years to get the yield to maturity. Since it's a 401k where you would be contributing regularly - is there are reason why you are trying to time the market with your 401k plan? Or are you risk adverse and retiring in a few years?

Perfect-Ad-2821

The knock against TIPS is it did a poor job measured by its purported role, that is, as inflation hedge. It’s essentially a longer effective maturity treasury bond vs normal treasury bond.

greytoc

That's probably because I Bonds have specific narrow use cases. It's really meant and designed for savings and not investing. That's why they are called savings bonds and they are non-marketable. It's not really an investing vehicle. For people that want to simply save and keep up with inflation - they could be appropriate. But there are also marketable TIPS which can be used instead.

Ok_Yellow9275

Why do you want TIPS? unless your income is over $500,000 stick to something else more practical. Go visit an adviser at a local branch, don’t trust what people are saying here. Sounds like a lot of garbage. Source: series 7 candidate

Torkzilla

Bullet points 2 and 4 in your list are big negatives to TIPS in my mind.  I had TIPS years ago but fully divested of them probably 2.5 years ago. TIPS ETF/MF basically don’t pay out unless the government claims inflation is increasing and they have to compensate these bonds extra.  Government has enormous incentive to make this not the case via dishonest reporting (which basically all inflation reporting has been since the early 1980s). I’d rather just stick to regular short/int/long treasuries and investment grade + high yield corporate bonds.  Those never miss payments and are very predictable in terms of (if I invest X I will get Y monthly).

kronco

Deflation. They would then loose value. Last October TIPS were around 2.5% and I think that was a 20 year high. Not sure we will see 3% at any point in the near future. Some links with some of the articles around TIPs from last year: https://www.morningstar.com/bonds/high-tips-yields-are-retirees-best-friend https://www.morningstar.com/bonds/its-time-consider-tips https://tipswatch.com/2023/02/05/tips-on-the-secondary-market-things-to-consider https://www.wsj.com/market-data/bonds/tips https://www.bogleheads.org/forum/viewtopic.php?t=394380 https://www.bogleheads.org/forum/viewtopic.php?t=412123 https://www.tipsladder.com https://www.bogleheads.org/wiki/Treasury_Inflation_Protected_Security

bob49877

You can once you are old enough to withdraw from retirement accounts, invest in individual TIPS in retirement accounts and hold to maturity.

Squezeplay

Stocks average more than 3% real returns, more like 6-7%. TIPS still have duration risk, if rates rise, they still lose market value until maturity. Other risks would be CPI no accurately reflecting inflation, and the actual payment lags the CPI used, so in a very high inflationary environment you will still be taking loses on that period of inflation.

BigSteve414

I do not recommend bonds at this time. If you need ballast for your equities, some say short treasuries or stuff like SGOV or BIL. I like my MM cash at >5% yield. Cash is 38% of my port right now, as bonds were killing me since 2020. Even TIPS,

Andr3w_E

Understanding these risks is essential for investors considering TIPS in their portfolio. It's advisable to weigh these risks against the potential benefits, such as inflation protection and diversification.

greytoc

When you choose bond funds, the factors are the same as when you choose equities even though as an asset class, debt investments may have lower risk characteristics. But it depends on your time frame, liquidity requirements, risk tolerance, and personal financial situation. I don't know much about bonds - so I gravitate towards bond funds instead of picking specific bonds. The exception would be treasuries since the credit quality and risk is simple to understand. So for target maturity bond funds - I use either Invesco Bulletshares or Blackrock iBonds - I think they are the only investment managers that currently offer target maturity bond funds. [https://www.ishares.com/us/strategies/bond-etfs/build-better-bond-ladders](https://www.ishares.com/us/strategies/bond-etfs/build-better-bond-ladders) [https://www.invesco.com/us/en/solutions/invesco-etfs/bulletshares-fixed-income-etfs.html](https://www.invesco.com/us/en/solutions/invesco-etfs/bulletshares-fixed-income-etfs.html) I use a mix of investment grade and high-yield (junk) funds. For constant duration funds - there are a lot of them out there. I also like PIMCO active bond funds. But if you want treasury funds - the credit risk is the same, the difference is the type of treasuries (ie TIPS, FRNs, CMBs, etc.) and the duration. So that's really up to you. Interest rates are currently high - so now is pretty decent time to get longer duration treasury funds to lock in rates if you have a longer time horizon. There are also diversified bond funds based on the legacy Lehman Agg index (now called Bloomberg Aggregate Bond index). Regarding buying treasuries directly through Fidelity - yes Fidelity has both secondary and auction. I usually just get the secondary since it's simpler and more convenient on Fidelity. [https://www.fidelity.com/fixed-income-bonds/individual-bonds/us-treasury-bonds](https://www.fidelity.com/fixed-income-bonds/individual-bonds/us-treasury-bonds) Fidelity also offered brokered CD's if prefer.

greytoc

A Series I Bond is a savings product - it's not marketable so that means it not something that you can buy and sell in a secondary market. It's a direct bond with the US treasury so when you want your capital out - you have to redeem it. The suggestion is the use TIPS - these are marketable inflation protected bonds from the US government. And because TIPS are marketable - they are simpler to invest. And there are ETFs which track indices which compose of TIPS. Explanation of a TIPS - [https://www.treasurydirect.gov/marketable-securities/tips/](https://www.treasurydirect.gov/marketable-securities/tips/) A popular TIPS ETF if you want to use an ETF for convenience - [https://www.ishares.com/us/products/239467/ishares-tips-bond-etf](https://www.ishares.com/us/products/239467/ishares-tips-bond-etf) Look at the "Real Yield" when you want to compare to Series I Bonds. You have to decide what investing problem you are trying to solve when you compare I Bonds with CD, etc.

kiwimancy

I-bonds are not fixed for five years. They float with inflation. Marketable TIPS have a higher real rate right now.

NoonGlory

I recommned you read a few books on investing before you start and remember, only invest what you are able to lose and live without. Many great books out there, a simple google search will advise you of the best ones. Investing is a serious matter and should not be treated as 'I'm gonna ask strangers for investing advice and go with it' type of deal. That being said, I'd start with (more-so) risk-averse EFTs : Some of the top EFTs to consider include the Vanguard S&P 500 ETF, which tracks the performance of the S&P 500 index, the iShares Core MSCI Emerging Markets ETF, which provides exposure to emerging market stocks, and the Invesco QQQ Trust, which tracks the Nasdaq-100 index. Additionally, the SPDR Gold Shares ETF offers exposure to gold, a traditional safe-haven asset, and the iShares TIPS Bond ETF provides exposure to inflation-protected US Treasury bonds. These are just a few examples of the many EFTs available, and it's important to carefully research and consider your own investment goals and risk tolerance before making any decisions. You can also **research** below EFTs which have upside potential: Vanguard S&P 500 ETF iShares Core MSCI Emerging Markets ETF Invesco QQQ Trust SPDR Gold Shares ETF iShares TIPS Bond ETF Vanguard REIT ETF iShares Core U.S. Aggregate Bond ETF Vanguard Total Stock Market ETF iShares Russell 1000 ETF iShares iBoxx $ Investment Grade Corporate Bond ETF iShares Edge MSCI Minimum Volatility ETF Vanguard High Dividend Yield ETF iShares Edge MSCI Multifactor ETF Vanguard FTSE Developed Markets ETF iShares Edge MSCI USA Momentum Factor ETF SPDR S&P Dividend ETF Vanguard Emerging Markets Government Bond ETF iShares Edge MSCI USA Value Factor ETF iShares MSCI EAFE ETF iShares iBonds Dec 2023 Corporate ETF

wanderingmemory

Depending on their tax situation, it does sound like bonds such as short to intermediate treasury ETFs would be a good starting point, but also consider some inflation protection such as iBonds or TIPS.

Pope_Beenadick

You should look at TIPS, which are literally designed to at least keep up with inflation and adjust based on it. IDK why you think bonds exist if they will never keep up with inflation, especially non government bonds.

validityBase

Gold value fluctuates quite a bit over time, and historically has remained elevated or depressed for multi-decade periods. You may be better off in inflation protected bonds (TIPS), or a simple money market fund like VMFXX.

lufisraccoon

>I don't see Bond returns beating inflation any time soon Pretty much all duration TIPS currently have a yield greater than 0% - most are in the 1.9%-2.2% yield ballpark. This is a false statement.

ZettyGreen

Some relevant background learning if you are not aware: You have to pay for safety. On a real basis, after tax, etc, "safe" assets generally lose to inflation(with rare occasional exceptions). Roughly in order of safety: * FDIC insured accounts (HYSA, CD's, etc) * Treasuries(to include I/EE bonds, tips, etc) * Money Market funds(MMF) (SIPC insured) * Cash like ETF's (SGOV, ICSH, USFR, etc) * MYGA's (SPIC insured) * Bank Accounts not FDIC insured, i.e. you went over the FDIC limits. * Stable Value Funds (SVF) * Municipal Bonds (not guaranteed, but generally state income tax free) * Short term bonds * Medium term bonds * Long term bonds * Real Estate(un-leveraged, i.e. no mortgage) * Preferred Stocks * Annuities, not SPIC insured * Leveraged Real Estate (i.e. mortgaged) * Equities FDIC insured accounts, MMF, generally lose to inflation. Some treasuries should keep up with inflation at least(TIPS, iBonds, etc) but after taxes, you probably won't. MYGA's are in the same boat, you might be able to beat inflation, but maybe only barely(and involve lots of insurance paperwork, apparently) and after taxes, doubtful. Bonds can beat inflation, but there is zero guarantee. bonds except for the past 40-ish years have not even kept up with inflation. This is the rare occasional exception, alluded to earlier. Real Estate will probably keep up with inflation, and if you treat it like a real business, you might even make some money. Preferred stocks should beat inflation, but takes on considerably more risk than everything else above it, but after taxes you probably can make a little. Equities should handily beat inflation, risk is obviously higher. The safer the money, the less people are willing to pay you for it. There is no free lunch.

IrishWave

The challenge is the long term investment aspect. The points around lack of cash flow aren’t debatable, and at some point, there’s inevitably a cap on demand from new investors. The one aspect you could challenge is that BTC will eventually turn into a store of value and offer a stable return equal to inflation, though that raises two major questions: * How many people currently invested in BTC would remain in BTC if they knew they would only get 2% per year? * How many of the above would prefer BTC as a store of value over something like TIPS? And considering that the market cap for BTC is already ~75% of the US TIPS market, if you’re answer is less than that, BTC is already overvalued as an inflation hedge.

inertm

I redeemed mine and am buying 5yr TIPS in April.

Castello-Ai

​ 1. **Bond Market Expectations:** * Bond market participants are pricing in expectations for inflation to moderate in the second quarter of 2024. This is reflected in the decline in Treasury yields over the past few months. * The Federal Reserve is expected to continue raising interest rates in the near term, but the pace of rate hikes is likely to slow. This expectation is also reflected in the decline in Treasury yields. 2. **Market Impact of Institutional Investor Trading:** * Institutional investor trading activity affects indicators of inflation expectations, with the price impact of flows being higher when overall market volatility is elevated. * Trend-chasing flows contributed modestly to the rise in inflation pricing since mid-2020, with certain investors' aggressive flows notably contributing to the rebound in breakevens. 3.**Market Dislocations and Contrarian Trading:** * Investor flows help explain the sharp divergence in relative TIPS pricing during March 2020, with trading behavior exacerbating market dislocations during periods of extreme volatility. * Contrarian trading can provide a stabilizing force in the market, but it may be limited during periods of extreme volatility, as contrarian investors may be reluctant to take on risk when prices are falling sharply. 4. **Implications for Policymakers:** * The impact of investor trading behavior on market dynamics points to an important role for market intelligence gathering efforts by policymakers, especially during periods of volatility. * Flows matter, especially when markets are volatile, and the official sector relies on financial markets to garner insights into inflation expectations relevant for the economic outlook.

Groggy_Otter_72

The entire bond market, nominal and TIPS and credit, disagrees with you. I guess you have a lot of insights that JP Morgan and Blackrock and Franklin Templeton just don’t have.

easyplants

If I had $10,000 cash to invest with today I’d focus on a growth strategy, buy liquid assets and create passive non-retirement income. For stocks, make it a habit to dollar-cost average and buy up to 100 shares+ of each, trust me on this, you'll thank me later: 1. $5,000 (50%) into money printer stocks, great companies and high quality ETF’S (Vangaurd first, Boogle-Head loving fiduciary for all) - Procter & Gamble, $QYLD, $VOO 2. $2,500 (25%) into TIPS (US treasury bonds) TBILLS - Currently 5%+ for 6 month maturity, Public app has an great platform (not an endorsement, just my personal experience) 3. $2,500 (25%) on unicorns/ promising new companies - $JOBY, $GABA LABS (expected) and Art-alternatives, Land and/ or Crypto - Banksy, Groundfloor app has the lowest fees (not an endorsement, a fact), ETH, BTC and SHIBA INU (Own 1 million of something goddamnitt!)

West_Flounder2840

You can’t eat, live in, or realistically expect to be able to barter with gold in the type of “shit hits the fan” scenario most goldbugs are obsessed with. Are you a paranoiac who is constantly worrying about the collapse of society? Buy bullets, MREs and water filters instead. Are you normal? Do you want to succeed, grow your wealth, and live at peace? Invest in index funds, income producing assets and aggressively pay down your mortgage. Avoid debt, drinking, and flashy cars. Are you angry goldbuggers about to mention the words “inflation hedge”? It’s not a good inflation hedge either. Buy TIPS if that’s a concern. No serious person holds precious metals as an investment asset. Do you want to know who does invest in gold? On average? Rubes. Watch Fox News for half an hour. Rosland Capital commercials using has-been actors like Tom Sellick to hawk way-over-spot junk coins to the most credulous morons imaginable. Sandwiched between commercials for “ultragun veteran flavored coffee”, cpap machines, diabetes drugs, and “turbo leveraged universal life insurance” scams.

admiral_corgi

Nice... Still pretty bullish. What else do you have? I have 35 VTI / 28 AVUV / 15 TLT / 3 HYMB / 3 FALN / 3 AVDV / 3 AVXC, with the last 10% in TIPS/Crypto/Gold

carrythen0thing

Fidelity does have a TIPS fund (FIPDX) Remember that you can also trade any ETFs (Vanguard, iShares, etc.) without additional costs on Fidelity

WafflesOfDestiny

TIPS causing a dippy-dip, can't imagine that's going to keep the whole market down though

RenZenthio

Just wondering what peoples thoughts are on my asset allocation. I am 21 years old living in America. I am a student and am soon going to get a job paying ~$44k a year and plan to invest ~$916 a month. I’m mostly looking to save for retirement (30+ year time horizon). For risk tolerance, I don’t mind seeing my investments dip pretty heavily with the market, but I don’t like gambling so no single stocks. I don’t have any debt, and I currently have $4800 half in total US stock half in S&P 500, 10% bonds, half TIPS half intermediate treasuries I’m about to start investing in my Roth ITA and I was thinking of this portfolio: 45% FXAIX (S&P 500) 20% VEA (Developed markets) 15% AVUV (small cap value) 10% SCHD (large cap value) 10% FNBGX (long term treasuries, with a glide path starting at 50 to reach 20% then 30% allocation to bonds, then switch to TIPS and intermediate treasuries) I was wondering if there was any glaring flaws with my portfolio or if it looked ok.

visionarymind

# FEELING LIKE 🅱️RUNO 〽️ARS ON THE STRIP WITH A FRESH SATCHEL OF BOOGER SUGAR & SPORTS BETTING TIPS 

Few-Sock5337

It's like buying TIPS bonds but without the liquidity.

Stock_Atmosphere_114

I think it all depends on how your planing on using your bonds. I like TIPS as a slight hedge against inflation. I like international bonds to tame the nationalist bias I have as a UD investor and I like short term bonds as a slight hedge against a market downturn to have those funds readily available should there be a significant down turn in equities. In the long run, I feel like DCAing into whatever bonds you're comfortable with, which match your goals and risk tolerance is a prudent move long term. I would be leery about buying in lump sum, however. I was recently proven wrong about my presumption that lump sum investing in the equities market was the best thing to do. Turns out it's not. Lump sum investing actually begets higher returns, go figure. On the inverse of that argument. I was talking with my mother-in-law about bonds and bond funds, and she told me how devastating her paper losses had been throughout 2023. I had no idea about the bond fund collapse. Now, after having done a bit of my own due diligence. I've been buying bonds and bond funds hand over fist. So... yeah. I think holding bonds for the long term is entirely justified, even with a time horizon of multiple years. I would simply caution against lump sum investing into them. You never know which way the winds will blow at the Fed. Not financial advice. Good luck!

skilliard7

Ben Felix has a good video on this. Most of the bubble is in large cap tech "magnificent 7" stocks. Small cap value stocks are quite reasonably priced and so are international stocks. If you are hedging against excessive valuations, small cap value is a good hedge. If you are hedging against a recession, bonds might be an option. If hedging against a recession AND inflation(stagflation), TIPS might be an option.

RIP_Soulja_Slim

Inflation has been dropping, so the distributions are dropping in line with the return on the underlying. TIPS are a yield + inflation adjustment, the latter part has been consistently falling since mid 2022.

kronco

My understanding is bond funds monthly payouts can be uneven as the bond portfolio they hold will typically have bonds paying interest semi-annually or annually as well as bonds maturing throughout the year. Sine they hold a lot of bonds, some months have more income then other months and the month-to-month distributions can be uneven. A TIPS fund probably has some characteristic specific to TIPs, though. (Probably greater variation.)

Heavy_Distance_4441

Great info, thank you! I noticed the distributions dropped considerably starting in December 2023. Does this mean there might be an adjustment in the summer? Choose to move a small amount of stable fund into this, but did not know it was TIPS/CPI related. First time hearing about such a thing, so again, thank you. 👍

RIP_Soulja_Slim

Point of clarification, this fund is invested in primarily TIPS, not normal bonds. Tips pay a fixed interest rate then have bi-annual adjustment periods based on the CPI. IDK about Pimco specifically, but many TIPS funds liquidate portions of the portfolio periodically, since the inflation adjustment is such a prominent piece of the return and applies as a price adjustment rather than an income distribution, it doesn't necessarily behave like a normal bond - in the sense that most of it's return won't come from coupons during periods of higher inflation.

belangp

iBonds are not CURRENTLY a good choice compared to other cash equivalents when you take a look at the yield. But there are some considerations that could make them compelling. If you want to protect your savings against inflation your only other alternative is TIPS, whose gains from the CPI adjustment are taxed each year as income. Second, even if the CPI has a negative print (deflation) in a six month period, the bond will never be adjusted down in value. Third, you can continue to defer the tax for up to 30 years. Generally this means you can use them to fund living expenses when you retire and possibly pay a very low tax rate (even zero) on the earnings.

Explosive_Banana6969

Sort of, but money markets and savings accounts both theoretically pose higher risk (though still very low risk). Most importantly savings accounts are FDIC insured but it’s limited to $250k so they are “risk free” up until that point, after that you introduce credit risk. Past $250k it would be wise to look into something like TIPS for a cash alternative (if you need that much cash or are risk adverse). Money market funds are not FDIC insured and can lose value, but federal funds like you mentioned are extremely liquid and short term so interest rate driven depreciation is minimal. Secondly both money markets and savings accounts face the same interest rate risk (repricing risk). That being, if inflation rises higher than the interest rate you will lose value. For savings accounts in particular you also have a floating rate which is not fixed to anything, so the Bank could lower the rate at any time for any reason. For federal money markets rates can and do change irrespective of inflation so functionally the same applies, the rate can be below or above inflation. To be honest all of these products are quite similar functionally and it really just depends on your risk tolerance and desire for returns. If you are seeking low risk stable returns (not just preservation) you might want to look into other debt options generally either treasuries, munis, or prime credit corporates. This sub was in love with tips last year but the fact of the matter is they are specifically designed to never really gain value above the inflation rate.

Explosive_Banana6969

TIPS are entirely designed as a cash preservation tool and specifically designed not to grow. If you are looking for a safe cash spot with essential no risk and no return, then they are for you. The interest rate at this time should be irrelevant tbh. If you are looking for a return look elsewhere.

diabeetis

? I haven't been here, and my core holding was short TSLA and long TIPS which both printed 

FarrisAT

Yes I’m nervous and expect a down month in March. The market is heavily underestimating inflation. 2 year breakevens rate is 1.9% right now. Based on TIPS. That’s CPI, not even PCE inflation which runs lower.

Stock_Atmosphere_114

If I were you, I'd take 50% of whatever you'd like to invest and put 50% of that into SCHD and the other 50% into QYLG, turn on DRIP and walk away. The remaining 50% either goes into HYSA or a TIPS fund to collect around 4-5% on your dry powder. That way, you've got two funds, essentially dollar cost averaging themselves, one for growth, one for stability. The remainder you can invest as you go whilst earning 5%. Not financial advice, just my two cents.

VeryStableGenius

The equity risk premium is at a near record low (matched by stock bubble of 2000). Stocks are at covid peak levels, but interest rates aren't at covid lows (ie, negative). Today [TIPS are paying 2% over inflation](https://fred.stlouisfed.org/graph/?g=1hKmD). So anyone who is antsy about the market and has a tax deferred account can just sit things out getting a nice safe real 2%. Outside a tax deferred account, bonds are more iffy because taxation is worse than for equities. But fact remains that equity risk premium is historically low.

VeryStableGenius

> then you might get a nice guaranteed return from TIPS IF you hold it fully to maturity I bought mine with a different thought: TIPS are paying a lot by histocal standards (2.08 today; 2.5 when I purchased). If and when rates fall, the TIPS will shoot up in value. If we are ever in an environment when real long term T-bill rates are zero-ish, they'll be worth a lot more. Then bail out, and buy stocks. > In equities you could hope to see nominal earnings growth adjust higher with inflation as companies become more efficient to protect their profit margins. There was an [interesting Fed paper](https://www.federalreserve.gov/econres/feds/files/2023041pap.pdf) that 40% of corporate profit growth of the past few decades was one-off rate cuts and tax cuts. This means you can't count on strong continuing profit growth, because rates (late 2010s) and corporate taxes were as low as feasible. The naive approximation is that stable return (growth + dividends) is 1/PE, understandable as imagining a company either returning profits to shareholders (dividends, buybacks) or using profits ro build more factories at the same profitability as current ones. > 2) equity risk premium being low vs government bond yields and credit yields means there are real alternatives to equities in a retirement portfolio. Doesn’t mean you should abandon them entirely though; Yeah, but you'd expect *some* people to abandon eqities for safe TIPS, driving securities down and restoring a historical equity risk premium. > don’t underestimate the power of a bull market to trend higher than anyone expected Yeah, that's the answer, I think: irrational exuberance. > are we in 1995 or 1999 of the dot com bubble)? equity risk premium is close to 2000 levels.

blueskiess

It’s worth saying a few things 1) assuming real yields don’t go back to zero and stay between 1-2%, then you might get a nice guaranteed return from TIPS IF you hold it fully to maturity. In equities you could hope to see nominal earnings growth adjust higher with inflation as companies become more efficient to protect their profit margins. 2) equity risk premium being low vs government bond yields and credit yields means there are real alternatives to equities in a retirement portfolio. Doesn’t mean you should abandon them entirely though; don’t underestimate the power of a bull market to trend higher than anyone expected (here’s a thought: are we in 1995 or 1999 of the dot com bubble)? Valuations can go a lot crazier than you would think.

VeryStableGenius

This seems to assume a static strategy. Not "PE is high, be safe and invest in TIPS. Wait ... PE fell - sell TIPS, buy SPY."

VeryStableGenius

> SPY drops 50 percent tomorrow and I’ll still come out ahead in 10 years over some one who holding TIPS only. Then I sell my TIPS, buy SPY at its nice low PE, and beat you.

kiwimancy

I think you're saying that if someone started with 500k and deposited 40k a year, SPY would beat TIPS starting in 2000 up to 2010? If so, that's incorrect. https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=2xuCDoRbF9gwEIKPaZg0EA

WhySoUnSirious

There’s no long period in time where TIPS beat the fucking SPY. Ever. And it’s not changing. SPY drops 50 percent tomorrow and I’ll still come out ahead in 10 years over some who holding TIPS only.

VeryStableGenius

If this isn't written with irony ... the doubling time is 72/R where R is the real rate of return in percent. For stocks R is roughly given by inverse of the price to earnings ratio of ~25. Ie, R=100x25/100=4.0% So the sp500 will double your money in 18 years. In the past, PE=16, so R=6% and it would have doubled your money in 12 years. Of course, the flip side is stocks could drop 50%, then struggle for a decade to reach their old value (think 1999). There's always been a trade off between safety and profit, encapsulated in the ERP. Now this gap seems to have shrunk to almost nothing. To put it another way, it's now mildly profitable to park your money in TIPS (especially in a retirement account) and hope for a crash where rates drop, TIPS shoot up in value, and stocks are cheap.

Ibew999

You’re welcome! While VOO and VTI are among the more stable investment options due to their broad market exposure, the short-term trading approach, especially with significant amounts of money, introduces a level of risk that might not align with you and your spouses’s goals, especially considering the timeline and the purpose of your investment. Given your goal of using your funds effectively until you buy a house in 2-3 years, it’s important to balance the need for a relatively safe investment with the desire for a return that outpaces what you’re currently earning in a money market fund (MMF) at 5.43%. In your situation and considering the short-medium term horizon, I’d recommend looking into high-yield savings accounts, certificates of deposit, short term bond funds TIPS, ultra short term bond ETFs, or conservative allocation funds. The best choice depends on you and your spouse’s specific financial situation, including your risk tolerance, income needs, and the possibility of needing access to your funds before your intended purchase of a house.

MarcatBeach

they are also reporting box 1f - accrued market discount. which you will probably have to reconcile when you report this on your income taxes how much of it is interest and which is capital gain. that is the best I could make of it. which might not be correct. but just a guess. I have to deal with OID every year on my TIPS. but that is report as such.

wanderingmemory

I looked into DBMF which does an ETF of managed futures. However, it *is* volatile. But the expense ratio is surely better than hedge funds 2-and-20. Gold and oil are *also* very volatile. The problem is that if there was something that let you "sell at a profit no matter what", and was extremely accessible, everyone would want it and bid up the price until the returns on it were very very slim. Just look at how small TIPS real yields are.

MarcatBeach

You can only buy 10k of I bonds per year per person. ( 5k extra if you get you elect to get your tax refund in I-bonds ). Right now the base rate for I-bonds is 1.30, which is actually pretty high in recent history. Not a bad deal. The problem with I bonds is that they have had a base rate of 0% or sub .5 percent for a long time. There are plenty of plays in the Treasury side of the world that will easily beat any HYSA or money market. you don't need to pay a fund manger to do it. TIPS have the issue that you have to pay taxes every year on the CPI adjustment on principal.

chimera240495

Is it the TIPS auction ?

ctrldown

How'd that 12:00 TIPS auction go?

MarcatBeach

Annoying tax wise... that is an understatement. Holding TIPS in a taxable account is a mistake you only make once.

ZettyGreen

It's certainly a good time to buy TIPS compared to history, it's rarely up around 2%/yr real return like it is now(though it's slightly below 2% last I checked). That said, you should re-think your asset allocation. Just because historically it's a good deal to buy TIPS right now, doesn't mean it makes sense for *you* to buy TIPS. When do you plan to retire? Are you on track for that plan? What is your plan for spending from your portfolio in retirement? Where will you hold these TIPS(they can be annoying tax wise in taxable accounts)? > Is it good to sock money in this or put it in the stock market like SP where it's kicking back up lately? Historically speaking, most of the time the broad stock market will out-perform TIPS, usually by several percent. That doesn't mean over any given time horizon that will always be true. There have been plenty of times where TIPS have out-performed stocks over a given time frame. Will your time horizon be a better one for TIPS or for equities? That's the future and nobody is any good at predicting that, so your guess is as good as mine.

Historical_Low4458

If you want to buy a house in the near future (within 10 years), then you shouldn't be investing it in the market anyways because the market might go down and not recover any time soon. If you don't want to lose money to inflation, then maybe consider something like I-Bonds or TIPS.

Dstein99

Just for the record I was thinking about buying the actual bonds. I prefer to buy the bonds than the etf because you lose the safety that many people buy bonds for and you’re just speculating on interest rates. It doesn’t work well when a good environment for TIPS causes the fed to raise rates and the bonds to lose values.

wellk_2049

TIPS doesn’t work the way you think it does

kronco

Seems people took your post to be more about DXY and the dollar relative to other currencies. When it was more about inflation. But, just for fun, the DXY plooted against gold: [https://en.macromicro.me/collections/45/mm-gold-price/592/us-usd-dollar-gold-price](https://en.macromicro.me/collections/45/mm-gold-price/592/us-usd-dollar-gold-price) And silver: [https://en.macromicro.me/collections/3351/commodity-silver/26720/us-dollar-index-vs-price](https://en.macromicro.me/collections/3351/commodity-silver/26720/us-dollar-index-vs-price) So, maybe precious metals and commodities (which are priced in dollars) if you expect the dollar to fall relative to other currencies. I would not go more then 5% to 10% of my portfolio on those, though. But, if concern is inflation within the U.S. Economy then stocks, TIPS, IBonds. Also, build a plan for how you will take Social Security. It is one of the few retirement income sources that will adjust up with inflation. See: https://opensocialsecurity.com You might also google search this: *inflation protected site:morningstar.com* or: *inflation protected site:bogleheads.org* as the topic is of inflation protection is greater interest among people closer to retirement so looking at information sources that cater to an older crowd (then reddit) might bring up some new ideas.

kronco

>TIPS Looked into this last fall (great time to build out some TIPs ladder at that time). Some of my research links: https://www.morningstar.com/bonds/high-tips-yields-are-retirees-best-friend https://www.morningstar.com/bonds/its-time-consider-tips https://tipswatch.com/2023/02/05/tips-on-the-secondary-market-things-to-consider https://www.wsj.com/market-data/bonds/tips https://www.bogleheads.org/forum/viewtopic.php?t=394380 https://www.bogleheads.org/forum/viewtopic.php?t=412123 https://www.tipsladder.com https://www.bogleheads.org/wiki/Treasury\_Inflation\_Protected\_Security

Dstein99

They’re called Treasury Inflation Protected Securities. Essentially they are very similar to normal treasuries except they earn a fixed rate plus the inflation rate rather than just a fixed rate. This way you can guarantee a rate of return net of inflation regardless of what inflation is over the life of the bond. My personal preference is equities are the best inflation hedge because companies control the economy, they choose the price of the goods and if you don’t like it you don’t buy them so they’re able to pass on a portion of the price increases to the consumer. I see you mentioned above about gold, but I’m not a big supporter of it. If you buy an ounce of gold today and hold it for 50 years you still have 1 ounce of gold. At least if you own a company or a basket of equities you get 50 years worth of earnings, or if you buy TIPS you get 50 years worth of interest, but if you buy gold you’re relying on someone else buying it from you for more than what you paid for it.

beastheadbutt

Also, how would I go about researching “TIPS”? When I google “investment tips” I’m getting everything but what I’m looking for.

Dstein99

That depends on your theory, if you think that the US Dollar will experience high inflation you could buy US equities or TIPS both of which are good investments in high inflation periods. If you think the US dollar is going to go away as the reserve currency then probably something like TTT it’s a short US Treasuries ETF so as people get away from the dollar the treasuries will lose value. The problem is if your time frame is sometime in the next 30 years or so for example you probably won’t profit even if you’re correct.

FaganY

I DCA every month. Haven’t heard about TIPS. Gotta look into it

kjmuell2

Haven't heard anyone mentions TIPS. Worth having if you contribute regularly and they get a big tax break by being held in your roth. But nothing wrong with having like 90% of your retirement in VOO.

Affectionate-Idea690

Treasury will sell $16bn 20yr bonds, $9bn 30yr TIPS Feb 21, 22 respectively

charly371

am i stupid? I thought inflation will surprise up so i bought 5-10Y inflation bond TIPS (ticket SPIP) why did it not jump when inflation new come bad? what i miss?

bloatedkat

There are no published guidelines, but usually by demand and fixed rates of competing products such as TIPS.

SingerOk6470

You clearly had the sense to know the results were very likely incorrect. I applaud you for asking questions. Simply said, this isn't how yield curve works. First, yield (interest rate) is price and price is yield. The two are the same thing. But there are many different interest rates for many different securities for different terms. The Fed controls the Fed funds rates which is an overnight rate. Although the Fed has no direct control over other rates, controlling the overnight rate is sufficient to have strong influence over other short term rates like 1 month Treasury yields and 3 months Term SOFR rates. But the Fed cutting rates has quite limited impact on 9- to 10- year rates. I.e. the Fed does not control the 10 year rates relevant for 10 year TIPS. I.e. The Fed cutting rates doesn't lower the 10 year Treasury or TIPS rates. Those other markets are more greatly influenced by other factors. In fact, the market for 10 year rate is already pricing in all the rate cuts that the Fed is expected to action this year, next year and so on, as well as inflation, term premium and everything else relevant. Some of these are more easily forecasted while others aren't. So you're going wrong in assuming that 10 year rates will fall by 95bps by year end with the Fed cutting rates about 3 or 4 times and assuming that Fed funds rates are the same thing as 10 year rates. Interest rates are different for everything, from Fed funds rates to Treasury rates to mortgage backed securities to high yield bonds. They are all individual markets which are somewhat connected because they are all fixed income investments.

AKdemy

This isn't a question for a retail listed options forum in my opinion. Probably better asked at places like money stack exchange. In any case, here are some direct methods. Retail: ** - Governments of at least the following countries issue Inflation linked Bonds: U.S., UK, France, Germany, Canada, Greece, Australia, Italy, Japan, Sweden, Hong Kong, Spain, Israel and Iceland and some emerging markets like Brazil, Mexico, Russia, India and the like. - Apart from single government bonds, there are various funds that invest in inflation linked bonds. See for example * [Erste Bank](https://www.erste-am.at/en/private-investors/funds/erste-bond-inflation-linked/AT0000619887). * [Vanguard](https://investor.vanguard.com/investment-products/mutual-funds/profile/vipsx) * [Schroders](https://www.finanzen.net/fonds/schroder-international-selection-fund-global-inflation-linked-bond-a-lu0180781048) - [i-bonds](https://money.stackexchange.com/a/154484/109107) but you’ll need to be one of the following: * A U.S. citizen, even if you live abroad * A U.S. resident * A civilian employee of the U.S. government, regardless of where you live - corporate inflation protected bonds Potential problems: - especially corporate bond markets are often illiquid - Inflation-Indexed securities can have a negative yield as a result of yields being below (expected) inflation. - Most IL bonds adjust the principal value with the CPI (so in case of deflation, you actually have a declining principal). Some countries like the U.S., Australia, France and Germany offer deflation floors at maturity, which means that if deflation drives the principal amount below par, you will still receive the full par amount at maturity. - Similarly, coupons payments vary as they are based on the adjusted principal (in this case there is no floor) - ILB prices will increase as real yields decline and decrease as real yields rise. If you hold them to maturity, that will not be a real problem. - If you invest in funds or ETFs, you have an additional problem, namely that they have no maturity date. Since TIPS are highly sensitive to interest rate movements, the value of a TIPS mutual fund or ETF can fluctuate widely in a very short period, and you are not guaranteed to get your principal back. **Structured products** - Banks offer inflation protected structured products but beware of the details. It's a bit like autocallables, if it sounds too good to be true it is not true (e.g. the product will have high fees etc that are not directly obvious, or risk you miss) More for HNWI or wholesale / interbank: - Inflations swaps (several variants, like LPI, zero coupon, YoY )

Any-Television-3394

No good way for retail investors to do this. a TIPS ETF is an option but still not great.

sext-scientist

You assume the Fed will cut and TIPS rate will drop. If you’re right you get double the market return. If you’re wrong you get half that. Why do you think the odds of that happening exactly this year are over 50%? If you’re wrong and it’s 13 months for any reason, you still lose remember.

unlikelycandidates

just the TIPS

sirzoop

No, it only works that way if you invented the full amount of money in TIPS. What happens in reality is you end up paying a ton of money in interest and the money you don’t have ends up losing value on top of it

SirGlass

>I know that I would pay Management fees, but you obviously wish that the Management would create an IRA that had a higher return that justified the fees. This is the wrong way of thinking about it. Almost no managed account is going to in the long run out perform the S&P500 index of some total stock market index Most financial advisors will create a diversified portfolio and allocate your holdings to USA stocks Foreign stocks Emerging Markets Small cap/mid cap Bonds (and various bond funds such as an allocation to shorter term, long term, TIPS ect) This diversification usually results in lower total performance over the long run, but that is a feature not a bug. It may have higher risk adjusted returns, lower total returns (more constant returns with less draw down) If you want returns in line with the S&P500 just skip the managed account and invest in an S&p500 index fund

tachyonvelocity

Bond values go down when yields go up, so at constant maturity, it makes sense for bond values to be as low as they were in 2009 since bond yields are as high as they were since 2009. LTPZ is also a TIPS bond ETF, which follows the real yield since it is indexed to inflation, and since inflation has fallen quickly but interest rates are still high, TIPS bonds have lost value as the real yield increased.

DoU92

TIPS cannot easily be transferred between generations and needs to be managed. Cash and silver can be handed down for generations and can sit in a closet. This is a hard benefit to grasp, but I find it very intriguing that my great grandson could potentially hold on to some of my silver. TIPS are a digital asset. Cash and silver are not. Cash and TIPS are part of United States financial system. Silver is not. Again, silver diversifies my portfolio and checks some boxes that other investments do not.

greytoc

As I said - TIPS are what people hold and has the EXACT same characteristics as cash if you believe that "cash is king". It is fundamentally considered a better investment than holding a commodity because it carries less risk if the goal is to "outperform cash". If you don't understand what TIPS are: [https://www.pimco.com/en-us/resources/education/understanding-treasury-inflation-protected-securities](https://www.pimco.com/en-us/resources/education/understanding-treasury-inflation-protected-securities) [https://www.treasurydirect.gov/marketable-securities/tips/](https://www.treasurydirect.gov/marketable-securities/tips/) I'm not sure what unique benefit you are referring to. The only unique thing that I can discern from your post is that silver is shiny and fun to collect.

greytoc

If that's your goal - most people would use TIPS or fixed income products.

D74248

You are going to have to take RMDs over a 10 year period, as others have pointed out. You don't have much control over this, the time frame is short by long term investment standards, and you won't be able to use losses to offset gains. Therefor I would construct a US Treasury ladder in this account so that each year you have a rung to withdraw and do with as you wish. And since it is in an IRA TIPS (the actual bonds) and Zeros might be good instruments.

Scorched_girth

Inflation remains stubbornly high, so TIPS funds like SCHP are feeling the pinch. The Fed is trying to get prices under control, hopefully this current downturn is temporary.

Much-Low-9490

The performance of TIPS (Treasury Inflation-Protected Securities) and related ETFs like SCHP can be influenced by various factors. While TIPS are designed to protect against inflation, their prices can be affected by changes in real interest rates and market sentiment. Factors like changes in interest rates, economic conditions, and investor expectations can impact TIPS prices. It's possible that movements in interest rates or other market dynamics since March 2022 have influenced SCHP's performance. To get a more detailed understanding, you may want to look into recent economic and market developments, central bank policies, and other factors influencing the fixed-income market.

el_cul

That indicates an inefficient market. It should be possible to take the opposite side of any bet fairly efficiently if there's a market for it. If interest rates are going to rise, I should be able to borrow (sell) long term and lend (buy) short term and come out ahead. It's just a question of which is the most efficient instrument to do it with. I agree you have to eliminate trading costs as much as possible but futures are very cheap for example. I do basically want to sell a 30 year TIPS now and then cover it by buying shorter term TIPS for the 30 year period. But how!? Im not sure I have the capital for interest rate swaps. So it's very possible there is an efficient market for it just not for retail use... Spitballing here... Other options are splitting it into interest rate futures (easy, common) and a separate inflation rate bet (not as common but more common than shorting TIPS).

drubs

TIPS funds generally pay out their inflation accruals as dividends. Obviously with the high inflation over the last few years those have been large. You likely had more than a 3% yield since 2022. That might be a forward looking metric now. And as others have said, rising yields mean lower prices. TIPS have the same duration risk as any other bond.

tachyonvelocity

Yea, so many people don't understand investments are priced based on expectations, so you only outperform when expectations are beaten. Ironically, now that inflation has come down quickly and yields are high, TIPS are starting to be a decent buy.

notapersonaltrainer

You buy [inflation] protection when [inflation] expectations are low and you think they will go up. If you buy [inflation] protection when [inflation] expectations are high/peaking you only make money if it goes up more. So if you believe inflation is underpriced right now and a second wave is coming then TIPS should outperform nominal bonds. Also, inflation protection doesn't protect against duration risk. The ideal case for TIPS is the fed letting inflation rip without choking it off with interest rate hikes. ie stagflation.

kiwimancy

TIPS do protect against unexpected inflation. They don't protect against rising real rates which is a side effect of the Fed trying to cool high inflation back down.

ElbowWavingOversight

A bond ETF like SCHP holds a basket of different bonds with different maturities. The average maturity of SCHP is 7.1 years. As interest rates rise, bond prices fall. In theory, all else being equal (e.g. no other interest rate changes), you’d make back that difference due to the increased yield after about 7 years. Even if you bought individual TIPS bonds yourself and held them to maturity, remember that TIPS only protect against *unexpected* inflation. This is because the amount of expected inflation is already priced into the yield when you buy the bond. If you want absolute inflation protection, then you should be looking at I-bonds. But there’s a limit to how many I-bonds you can buy a year.

el_cul

I'm looking. I found put options for Jan 2025 TIP etf that are not wildly under-traded. That's seems to be the longest I can get. https://finance.yahoo.com/quote/TIP/ I could roll those every year but I'm really looking for a 25 year+ investment. If I'm right after 10 years, then I'm not getting that long term payoff right? My options will roll at prices reflecting the new reality. Is it not possible to get the inverse of just buying 25 year TIPS?

throw3142

I guess short TIPS? TIPS benefit from higher-than-expected inflation and lower-than-expected nominal rates.

trainwreck001

ALL OF YOU HERE WOULD MUNCH ON PELOSI MOUNTAIN FOR SOME OF THEM STOCK TIPS. 

kiwimancy

AGG had a 18% drawdown in 2022. How about 40% Commercial paper (JPST, BOXX) 20% Aggregate bonds (BNDW) 15% TIPS (SCHP) or Series I savings bond 5% Gold (GLDM) 20% Stocks (VT, VTI)

mark2talyho

Yield didn't tail because its already been selling off like a mofo. Demand was weak though. Last weeks TIPS auction had decent indirect demand, so the elevated direct and dealer percentages today was still a bad sign.

GrandOk8202

If in taxable, I'd dump SCHD and I'm not a big fan of TIPS mostly saying that because this is a very sane normal portfolio so I wouldn't change much. If you want to avoid rebalancing taxes in the future a VXUS or VTI type fund might be better with this setup. With the exception being AVUV it's the only ETF I've had in taxable over the past year if you're doing traditional bogleheads style ETFs I think it's worthy of being the one exception with a reasonable fee behind it. Traded it from $76 to about $90ish Nov-Jan at 30% of my exposure, looking to get back in once treasury momentum looks safer. I don't even think it needs to be traded TBH buy and hold on that if you have a good avg price it's getting to the point where it's demonstrating consistent alpha over the non factor based low cost small cap funds.

DaMan619

[3M TIPS is 3.3%](https://www.wsj.com/market-data/bonds/tips) 3M T bill is 5.5% [Market is pricing in 2.3%](https://fred.stlouisfed.org/series/T5YIE) This is more of a for fun than profit exercise so its unlikely you gain or lose much either way.

EnvironmentalBag4250

It really only makes sense to me if you could somehow predict a huge jump in inflation in the short term. If you knew inflation was going to jump like that, you might be better off buying precious metals. Otherwise you might as well just purchase TIPS and hold, or buy short term bonds and be guaranteed an income.