VTIP
Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares
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Gold Bull Peter Schiff Slams Robust Q3 GDP As 'Phony Growth,' Warns Of 'Lower Living Standards' For Americans - Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (NASDAQ:VTIP)
Do you know of any long term TIPs (inflation protected bonds) funds?
Seeking a short-term cash parking lot. Why is the "SEC Yield" so high on iShare's $TIP and what are some other good options?
Thought on Set and Forget yet Aggressive Taxable Portfolio?
Struggling to understand TIPS and VTIP (Vanguard Short-Term TIPS)
VTIP increases Dividend to $1.117; ex-dividend date is 12/23 (9% annualized rate).
Vanguard Short-Term Inflation-Protected Securities Index Fund (VTIP) Dividend History
Short-Term Inflation Protected Securities
Short-Term Inflation Protected Securities ETF
VTIP seems like a no brainer holding right now. Am I missing something?
VTIP seems like no brainer holding right now. What am I missing?
IRA advice and advice in general on long term investing
Creating a Dividend-Only Stock Portfolio on a "Self-Serve" Platform
Is there a site that shows graphs for prime interest rate versus a stock or ETF?
Any books suggestions on how bond ETF is constructed and managed?
Why are inflation protected securities down when inflation is way up?
thoughts on investing in TIP or VTIP for inflation protection
Mentions
$250k in VT $150k in VTIP This is the only way...
This really depends on your time horizon for this money. SGOV has already been recommended. Know that it's super short duration (0-3 months), making very similar to a HYSA. You could go for some longer duration but still short-term ETFs: SPTS: Short-term treauries, average duration 2 years BSV: 75% treauries, 25% corporates, avg duration 3 years VTIP: short-term TIPS (inflation-linked Treauries), avg duration 2.5 years If you know both exactly how much you need in the future and when, individual bonds or a CD are fine. I strongly recommend individual investors stick to government (treasury, agency, muni) when buying individual bonds. Anything else requires extra research and the disclosed financials aren't always truthful (see: 2008).
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.
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.
I have my cash in VMFXX that is yielding 4ish%. Why not something like that instead of TIPS ( or VTIP ETF)?
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.
The pain trade is always higher. Today will be another day of stocks going up. Owning 20 percent bonds has cost me over a million dollars this last decade. I am at the point of selling BND, BNDX, VTIP and going 100 percent stocks. Tom Lee and others on CNBC know what they are talking about.
Need to get out of VTIP and buy more VTI.
I would look an ETF of some kind. Someone here recommended a world market one to hedge against volatility in the U.S. or any country. You’ll need to do your homework. Something like this might give you minimal risk - • 50% bonds (core intermediate-term, e.g. BND or AGG) • 10% short-term bonds or CDs (for near-term income stability) • 20% dividend/value stocks (e.g. SCHD or VYM) • 10% total-market or global equities (e.g. VTI or VT) • 5% inflation-protected bonds (TIPS) (e.g. SCHP or VTIP) • 5% cash or money-market fund (for immediate liquidity)
Diversify out of individual meme stocks you read about on reddit and into low cost broad market index funds (i.e. VT). And keep any money for a house in something like U.S. Treasuries (VGIT/VGSH depending on when you plan on buying) and/or TIPS if unexpectedly high inflation would put the target out of reach (VTIP).
Yes I see what you are saying. I lost like $6,500 on JDS Uniphase back in early 2000s and was invested in many tech stocks at the time which declined. Now I just own VTI, VXUS, VBR, BND, BNDX and VTIP. My portfolio has gone from 1.1 million to almost 3 million in 9 years. Maybe just stick with index funds. I know I could have done better with the Mag 7 but based on past experience I just went with index funds.
No need to flee to cash ( unless you see a near term opportunity to buy a dip. ). Re-allocating some to international markets that are operating at a more sane P/E ratio and have currencies that are getting stronger relative to the dollar is completely warranted. Plenty of short term investments that are better than MMF. Going 70/30 with equities on one side and bonds/commodities on the other makes lots of sense. Personally holding: \~ 70% VUG ( US Large Cap ) VGK ( European Large Cap ) IEMG ( Emerging Markets ) \~20% IAU ( Gold ) \~10% VTIP ( Inflation Protected Treasuries \[ Cash Equiv \] ) The gold and VTIPS damp down on the volatility of VUG and have allowed the overall portfolio to outperform the S&P. When current US monetary, trade and immigration policy come home to roost ( sometime in the next few years ) there will be an opportunity to buy US equities on the dip. In the meantime, an inflationary currency will continue to push equity and commodity prices higher so enjoy the ride.
Ok I'm thinking about these changes based on everyone's feedback: Bucket 1: 5% in swvxx/vmfxx/spaxx (wherever my accounts land after consolidation) and 5% VTIP Bucket 2: 40% VOO/FXAIX/SWPPX 20% FFTWX/SCHD/VTV 5% SCHF Bucket 3: 30% SWLGX As retirement nears I'll shift percentages from Bucket 2 to Bucket 1 and reduce percentages in Bucket 3 as well.
So I did a mix of bond ETFs, some in euros, some short term, some inflation protected. I'm still not 100% sure about them, I have to do more research, my broker charges me 1$ per transaction so it's easy to rebalance VTIP, VECA, BSV
First - yes, it's confusing at first, that's normal. It'll get easier. Second - no one, and I mean NO ONE, including myself, has the "right" answer. It's about what lets your savings grow above inflation in a way where the risk doesn't keep you up at night. That said, if the thinking is about investing as someone in your early 20s, time is on your side, so I would say you should be aggressive. Especially in a Roth IRA - you can't pull from it for a long time, so you want what will compound well. My suggestion for my little sister, who is in almost the exact same spot as you, was to do the following: 50% VOO, 35% VTI, 5% VXUS, 5% VTIP, 5% company (or companies) that you have conviction in. If none come to mind, put that 5% in VOO as well. This is assuming you want something you can auto-contribute to for years and not think about. If that's the case, I'd also recommend using M1 for your roth IRA - you can set auto contributions up, and it will invest the money into whatever is underweight in your portfolio. Then like once or twice a year you can hope in and auto-balance your account if you like as well. But it's easy in that dividends will be automatically reinvested, and like I said, they autoinvest in whatever is underweight at the time. - Note: I used to use M1, but moved to fidelity as I am a very active investor. If you are looking to be active but just want a place to start, do the % split I suggested but use something like fidelity for your Roth
Correct, don't split it between those 2. They are covering the same index - not sure what OC is talking about. VOO is better to buy and hold (lower expense ratio). You'd want to use SPY if you are playing options due to greater liquidity. But for your purproses, VOO is better. If you are concerned about Tariffs effect, you could put 5-10% in VXUS (everything outside of the US) to get you some diversification. Also, "growth" stocks - one's that don't pay dividends, are usually hit the hardest by economic slowdowns, so maybe instead of picking a growth fund, go basic with VOO or VTI, then some diversification into VXUS or a bond fund (I'd recommend VTIP for a Roth IRA).
VT and look into BND, VTIP, VCSH. I would probably go with 60% VT 20% BND 10% VTIP 10% VCSH but if you want simplicity 60% VT and 40% BND is fine, there aren't any rate hikes on the horizon.
2% in JAAA and VTIP that I count as cash
What about TIPS? I had been reading about them, because they are supposed to be “inflationary protected” but when I looked at TIPS ETFs (TIP, VTIP) and the time period from March 2021 to June 2022… it seems as if it actually decreased in value. Does one have to purchase TIPS directly to get the inflation protection? Or am I missing something else?
I personally feel that allocations under 10% aren’t worth it. 5% in defense isn’t going to noticeably affect your performance and just over complicates things. Maybe do something like 60% VTI, 20% VXUS, 10% BND, 10% GLD? If you don’t like nominal bonds you can swap out BND for VTIP.
Even if the market was doing well that isn't a good place for a house down payment. CD, SGOV, HYSA whichever has the highest yield put it there and forget it until you get your house. There is also VTIP and STIP
Definitely don't pay off the mortgage, you'll get higher interest rates in a money market fund like VMFXX. Personally my money is mostly foreign bonds (BNDX) with a substantial minority in foreign stocks (VXUS) and a little bit in gold (IAU). If you want to play it super-super safe though you could do a money market fund or inflation protected bonds (VTIP). Note: all tickers except VMFXX are ETFs. All ETFs except IAU are Vanguard funds, and have traditional mutual fund counterparts which you can find via Vanguard's website.
A 100-year revaluation of bonds would be forced and would be seen universally as a default on US debt. Lowering interest rates is not going to have the effect of making the tariffs work. Rather, it will simply hasten the winding down of the reserve currency status of the US dollar. VTIP will cover surprises in inflation, but not necessarily dollar devaluation. If you invest in foreign stocks, these are usually exposed to "currency risk," which is what you want in this case. Most foreign bond funds are hedged to the dollar, so know what you are buying there. Gold and gold miners are already high, but as part of an all-weather portfolio, not bad at even these prices (10% max, sell if it moons, buy more if it lags). Foreign utilities an infrastructure. Foreign real estate. Look for dividends.
If you are saving for a house, you need that money soon. Don't gamble. Maybe look at SGOV, which is \*\*ultra short\*\* treasuries. Super safe. If it looks like we are going to have an inflation spike, you can switch into VTIP (Vanguard Inflation Protected Treasuries). These are more volatile though. They will protect you if we have an inflation spike, but they go up and down a little bit. There are some people who are saying we could have a 10% correction or something in the next 3 years. It is conceivable that it could be 50%. I don't know what is going to happen, but understand that the volatility you are seeing right now is fear, and it is fear of some bad things happening, not just fear of an overextended market. Keep the money you need soon as safe as you can.
4% isn't too bad. If you're worried about inflation hedge look into Something like $VTIP Candidly, I don't know enough about it but plan to research a bit more. Supposed to be a pure inflation hedge?
I'm already pulled out of the US stock market. I've got a big block of BNDX, a smaller block of VXUS, 5% allocation to IAU (but I just learned IAUM has a lower expense ratio), and calls on VTIP.
# **TLDR** --- **Ticker:** VTIP (Vanguard Short-Term Inflation-Protected Securities ETF) **Direction:** Up (Hedging strategy against inflation) **Prognosis:** OP bought 20 VTIP call options expiring 8/15, currently down ~8.44% but views it as a long-term inflation hedge, not a short-term trade. Illiquidity is a concern for future rollovers. **Current Status:** Currently -$212.00 (-8.44%) in unrealized losses. **Alternative Strategies Considered:** Commodities (imperfect correlation with inflation), Shorting regular treasuries while buying inflation-protected treasuries (high risk and brokerage limitations).
The House passing a debt-ceiling increase probably means we don't have to worry about a Treasury default for awhile but even so, I don't really regret selling \~$48k in VTIP and replacing it with BNDX + \~$2k in calls on VTIP. [https://www.bloomberg.com/news/articles/2025-04-10/house-passes-budget-to-advance-trump-tax-cuts-debt-limit-boost](https://www.bloomberg.com/news/articles/2025-04-10/house-passes-budget-to-advance-trump-tax-cuts-debt-limit-boost)
I've got calls on VTIP: protects me in case if hyperinflation but if there's a default my downside is like 2% of what it would be owning VTIP outright. Put-call parity motherfuckers.
Yeah, I never short term traded before. But this year I was just watching the news and the impacts on the S&P and kept wanting to pull out. Every time Trump did something dumb I resisted the urge to pull out and then markets dropped and I felt like I should have trusted my intuition. So finally before "liberation day" I tried actually pulling out, and initially it seemed like it worked. I'm confused now, so haven't bought back yet. Do you think I should just stay with VTIP for now?
Am wondering the same. I moved all my money from different S&P ETFs to VTIP and people told me I won't time the market properly. I thought it was fine because I'll follow the news. But now I'm confused. Do I move it back or is it about to fall again?
Oh dark thirty ticker check in: \* VTI: -5.88% \* VXUS: -6.19% \* BND: +0.11% \* VTIP: -0.16% \* GLD: -2.31% \* TSLR: -23.80% I guess at least US stocks outperformed international stocks. Yay?
VTIP to the moon. Stagflation here we come
Zero dark thirty ticker check-in! \* VTI: -0.7% \* VXUS: -0.18% \* BND: +0.7% \* VTIP: +0.27% \* GLD: -0.27% \* TSLR: -2.13%
Still have 30k in VTIP - gonna liquidate to buy the dip XD lets fucking charge this bitch and make some shmoney this the biggest overreaction ive ever seen
Congress needs to raise the F ing debt ceiling so I can buy BND again (and stop worrying about a default on my VTIP...)
Recessionary protection measures- money market, VTIP, gold, and the few us stocks that seem impervious to current trends.
PCLIX high fees or loads, though. [https://www.morningstar.com/funds/xnas/pclix/quote](https://www.morningstar.com/funds/xnas/pclix/quote) I've seen some other general funds but can't find them now. Article: [https://www.morningstar.com/markets/what-invest-during-high-inflation](https://www.morningstar.com/markets/what-invest-during-high-inflation) What about a combination including VTIP and an REIT fund?
The YIELD on both VTIP & STIP are below 3% so you are sacrificing INTEREST for safety. SGOV has the same safety as the US Dollar & the Yield more than 1% GREATER than yours.
I also like VTIP or STIP for inflation protection.
SGOV and BIL etfs are good suggestions, but I think you can protect yourself against inflation with short-term TIPS funds, like VTIP or STIP. They have longer duration than SGOV or BIL so there is a bit more interest rate risk, but it is worth considering.
\>> I feel the need to post on arguably the best sub for some investment advice in these mild times. I loved that closing line. I feel compelled to add something so I'm gonna do two: CRMD, VTIP.
Look up VTIP … other mechanisms as well inflation protected etfs… gold would be better than cash and you don’t have to time that much keeps value fairly well … use some funds like sgol or gld or phys iau many more if you don’t want to literally have a safe of gold. I think your husband is onto something but ratio seems off. Can’t just sit around with cash inflation will be bad too.
Money market funds or short term treasury etfs like SHY or VGSH. VTIP is fine too.
You need to account for both interest rates and inflation expectations for TIPs. Rates can drop and TIPS values might not follow depending on inflation expectations: https://corporate.vanguard.com/content/corporatesite/us/en/corp/articles/pro-tips-take-into-account-inflation-protected-bonds.html Individual TIPS are kind of a pain to buy and sell. I buy long duration TIPS but only to hold until maturity; never with the intent to sell. Short duration, I use VTIP for some inflation protection (Vanguard adds VTIP to their target date funds about 5 years from retirement target date). VTIP is short duration and less interest rate sensitivity so I would not expect it to respond as much to rate changes. [https://www.morningstar.com/etfs/xnas/vtip/quote](https://www.morningstar.com/etfs/xnas/vtip/quote) notes this for that fund. Funds with higher duration may see their interest-rate risk dwarf the inflation-protection benefits of TIPS. While this fund’s muted duration curbs its potential return, it provides a purer inflation hedge with lower volatility. If TIPS bonds are held in a taxable account they have some special considerations as you have to pay taxes on the "phantom income" (google that). I think TIPS are best used for capital preservation and inflation protection. I would think short duration TIPS are less influenced by Fed rates and more influenced by inflation expectations.
"The enemy of a good plan is the dream of a perfect plan" In theory, interest rate cuts are identical for both etf owners and bond owners, as your etf will appreciate in value, and the yield will decrease, and for the bond holder his bond value will increase and his yield will decrease. You may fare better than the etf if you buy only 5 year tips, and you might do worse if they end up raising rates. I would hold VTIP for short term investments, cash for immediate expenses, and stocks/bonds for intermediate to long term investments.
I'd say VTIP. It provides short term inflation hedges, so if inflation skyrockets from tariffs, it goes up, but it also is fairly low duration so volatility is somewhat low.
VTIP is simplest, short term inflation protected securities. Maybe some commodities.
I run the gamut, total bonds (BND), aggregate bonds (SCHZ), HY corp. (SHYG), Tips (VTIP). Some are to reduce volatility, others for income
I would like to save money for a down payment on a house in about 3 years. I'm targeting a return greater than current savings/money market accounts, but with a bit less risk than simply going all in on the S&P500. What would be a good ETF allocation to achieve this? Some background: - I have an emergency fund. - I regularly contribute to retirement. - Money going into this strategy is what's left after paying bills and contributing to retirement. I plugged a few ETFs into Portfolio Visualizer and came up with 75% SCHD, 25% VTIP. Would you recommend something different?
100% VT in my taxable and 401k. Stock picking in my IRA with Fidelity. Have emergency funds in short term inflation protected bonds (VTIP).
15% VTIP 5% Gold. 5% Fundrise. 30% QQQ 10% VXUS. 15% SCHD. 15% SGOV. 5% UUP.
[https://www.multpl.com/shiller-pe](https://www.multpl.com/shiller-pe) Yeah, I am putting all new money in my VTIP position until this changes.
NVDA is riskier because it is one stock concentrated entirely on AI computer chips. I am holding long (several years). Those bonds are called TIPS. The easiest way to get exposure to them is buying shares of a tips bond fund, such as VTIP since you’re on Vanguard. Same goes for Utilities ETF’s and Healthcare ETF’s, you buy shares of the funds that provide broad exposure to many such companies in those sectors. Examples: VPU and VHT.
I suggest you look into treasury protected securities like VTIP or STIP.
but it performed great in 2020 and 2021 when markets were correctly anticipating inflation and cash was trash. Even the short duration of VTIP wasn't enough to counteract the bloodbath in all bonds as rates rose very rapidly from zero. In that environment only shortest term treasuries work. And I don't think we'll be seeing zero/near-zero ever again. 2009-2021 was the anomaly.
VTIP performed poorly during 2022 when we had high inflation.
* **Core Holdings (URTH, VTV, FLTR)**: These make up the bulk of the portfolio, and they provide solid exposure to global stocks, U.S. value stocks, and bonds, which is a good foundation. * **Redundancy**: ETFs like **IAU** and **GLD** both track gold, and **IGSB** and **VTIP** both cover short-term bonds, so you might simplify by choosing one of each to avoid unnecessary overlap. * **Small Allocations**: With only 4-5% allocated to the other ETFs, it may not move the needle much. You could consider consolidating these into fewer ETFs with broader coverage, such as sticking with **IEMG** for emerging markets instead of splitting it with **EMXC**.
If you want safe money, the best option probably is either short term Treasuries or short term TIPs. Look into SHY, VGSH and VTIP. Defensive stock are still stocks, so they’re still risky and they’re still highly correlated with the stock market. My point is, they’re safe relative to VOO, but they’re not the safest thing in the world.
What does VTIP look like for state taxes? Taxes are what has led me to SGOV and SNSXX for cash equivalent holdings.
Hysa, or high yield savings accounts, or money market funds or sgov are invested in 0 to 3 month government bonds. So, they're liquid and they earn rates, which currently are decent... 4.75% or so... Because that's the Fed funds rate, which the Fed has temporarily set that high to curb inflation. But, as of September, they're cutting rates. Probably another half percent before year end, and another 1% next year.... Because inflation is now 3% or so (depending on the measure). Meanwhile, tips funds are also treasury but designed to have an inflation feature. VTIP ARE Short-Term Inflation-Protected Securities Index Fund seeks to track the performance of a benchmark index that measures the investment return of inflation-protected public obligations of the U.S. Treasury with remaining maturities of less than five years. Just by having securities over 3 months will give it a better long term return profile than a 3 month bond.
Bond ETFs are more liquid and can be bought and sold anytime, I believe they are also laddered. I like VTIP, it’s incredibly low volatility, and has a nice dividend.
Up 6.56% but I have a conservative portfolio of mostly ETFs and I basically use it as a checking account. I keep cash reserves minimal, I’m not rich at all but I don’t like to hold onto rapidly depreciating assets. VTIP will do me just fine.
Buy TIPS, I recommend VTIP from Vanguard. If you're intent on using active funds I would not recommend JEPI and would instead go with PIMIX or Vanguard's multisector bond fund which is similar. You can do 25% VTIP, 25% BIV (Intermediate Term Corp/Government Bonds), 25% PIMIX, 25% VGSH. With covered call etfs you're getting all the volatility and a limited upside, they do not make sense for anyone honestly.
Take into account that the price of gold is really volatile. If you’re investment horizon is one year, you could lose a lot of money if you invest in gold. For example, if you had bought gold at its all time high during the 80s, you would only recently had made the money back. If you’re afraid of the US dollar losing its buying power, you can invest in TIPs, which are bonds linked to inflation. VTIP is a short term inflation bond fund. Finally, regarding the “geopolitical uncertainty”, it has always existed. If you read the news it always seems like the world is going to end. Don’t panic.
What share of my portfolio should I put in these ETFs like VXUS and VTIP?
>VXUS and VTIP have performed badly in last 10 years If you don't have a portion of your portfolio that underperforms another portion, then you likely aren't properly diversified. International equities have outperformed US equities over substantial periods of time. More importantly, geographic risk is uncompensated risk, i.e. risk for which you cannot expect to receive a premium. Uncompensated risk should be avoided, often through better diversification. Read more. Develop your own investment thesis. Ignore past performance. Stick to that thesis.
I considered VTI, but VXUS and VTIP have performed badly in last 10 years, thanks for book recommendation I’ll reed them, I’m currently watching Robert Shiller on Yale courses.
Before picking individual stocks, ask yourself, "am I Warren Buffett?" If you are not Warren Buffett, then buy and hold a portfolio of low-cost, well-diversified index funds. Consider a r/Bogleheads portfolio such as VTI + VXUS + BND/VTIP. Read more about index fund investing and the psychology of money and investing. Three books to recommend on this are Morgan Housel's *The Psychology of Money,* Jack Bogle's *The Little Book of Common Sense Investing*, and Rick Ferri's *All About Asset Allocation.*
Go to the r/Bogleheads [Wiki](https://www.bogleheads.org/wiki/Main_Page) and look up the [three-fund portfolio](https://www.bogleheads.org/wiki/Three-fund_portfolio). Or go to Rick Ferri's [Core-4](https://core-4.com/process/) model portfolios and use those as food for thought. Each one is properly diversified. You can swap in/out a fund or two to fit your specific investment strategy. One might take his [Classic Core-4](https://core-4.com/classic-core-4-portfolio/) and swap VNQ out for VTIP, for a portfolio of VTI + VXUS + BBND + VTIP, as just one example. If you want to learn the finer points of asset allocation, I'd suggest Rick Ferri's book, *All About Asset Allocation.*
Some comments: 1. As others have pointed out, you’re looking at price share and not at total return. If you take into account interest payments, the numbers are different. 2. Bonds can be risky. They are subject to two kinds of risk: Interest rate (or duration) risk and credit risk. First, they are subject to the risk of interest rates going up before they reach maturity. If for example a bond has a 2% yield and new bonds of the same duration have a 4% yield, then you have to sell your bond at a discount for people to buy it instead of the higher yielding new bond (but if the interest rate goes down, the price of your bond increases). Second, corporate and municipal bonds are subject to default (the issuer doesn’t pay its debt) or downgrade (the issuer is seen as more risky than before) risk. Treasury’s don’t have this kind of risk. 3. You only have to look your investment portfolio as whole. Bonds are not only used because they’re less risky, but also because they’re subject to different risks than stocks. They serve a diversification purpose. The idea is to invest in assets that have positive expected returns and that are as uncorrelated as possible. In general, stocks and bonds are uncorrelated. The idea is that if one goes up the other can go down. There are rare environments where they become positively correlated (periods of unexpected high inflation) and we just went through one (2022). 4. Stocks are even more risky. Stocks can have 40% to 50% drawdowns (it happened twice in the 00s). This won’t happen with a bond fund. Stocks can also have negative real returns for more than a decade. 5. There are ways to lower bonds risk. You can have a fund with a shorter duration and that only holds Treasuries. For example, VGSH only holds short duration Treasuries. Its drawdowns will be low and not last long. 6. You can also hold short duration TIPs (inflation protected bonds) through the ETF VTIP. During retirement it’s probably a good idea to hold both VTIP and another bond fund. 7. You should still hold three years of cash/CDs during retirement anyways. However, it’s probably a good idea to have more fixed income than that. 8. Usually during retirement it’s recommended to have a 60/40 or 50/50 stocks and bond portfolio on top of the three years emergency fund. Some people also recommend 10 to 20% gold, as it is an uncorrelated asset to both stocks and bonds. The idea is to reduce drawdowns of your whole portfolio, which are really risky during retirement due to sequence of returns risk (if your portfolio has a big drawdown during your first years of retirement, there’s a risk that you will run out of money during your lifetime).
Low volatility, because the money is likely to be needed sooner rather than later. Something like HELO gets you reduced volatility but still exposure to stocks. VTIP or other short-term bonds, as short term bonds are not as sensitive to rate changes. Small amounts of anything that has higher volatility. If you keep individual stocks to 1% (or 2%) per stock of the entire portfolio, and you are willing to do the work, that is a pretty safe way to invest if you know how to by stuff when it is on sale.
>I'm just doomsaying and speculating by looking at some historical huge losses like black monday or the great depression If you were long throughout 1987 and held through Black Monday, you ended the year down only 2.4%. Those who held recovered fully the following year with a healthy 7.3% return. The pain was borne by the panic sellers. It's funny, my father was a broker and ran the options desk at EF Hutton back in 1987; I was a child then and will never forget the look on his face when he came home that day: He looked exhausted and defeated. Yet the world did not end. The Great Depression was a very different situation: 1929 might have been another 1987, but the great leaders of the time attempted radical and often contradictory moves to "fix" things. This only created an environment of uncertainty that exacerbated and prolonged the situation. One can think of that approach as the opposite of Bogleheaded, since it was exactly contrary to Jack's advice that in the midst of market upheaval, "don't just do something, stand there." Amity Shlaes' book, *The Forgotten Man,* is a great book on that topic if you enjoy reading about such history. The 1970s stagflation and the 2000s lost decade are the closest we've come to that and, thankfully, they weren't close. Nothing since has come close to 1929-1945 and we all should hope that remains true. >I could retire early, but I would need to keep money invested to continue to live off it for years to come. What do people do when they reach this point? Would switching x% to bonds really protect my funds? You didn't say how much you already have in bonds and you seem to be doubtful about them. Let's reframe the question this way: If the prospect of volatility in your current asset allocation gives you anxiety, then is there a solution, preferable over bonds, to reduce that volatility? * Equities? Not helpful to reduce volatility. * Real estate? REITs have the volatility of equities so they don't help. Directly owned real estate holds its value but is very illiquid and requires either "sweat equity" or the cost of a management company to maintain. * Cash? Cash helps with volatility, but the yield on cash rarely outpaces inflation except over very short periods. * Commodities, currencies, crypto, and derivatives? They offer zero internal rate of return: They're just price speculation that more resembles a weekend in Las Vegas than a genuine investment. That leaves bonds. Adding nominal bonds with BND or VGIT and inflation-indexed bonds with VTIP is a reasonable approach. If you're 100% equities right now, consider 80% equities and 10% BND 10% VTIP as food for thought. Adjust those allocations until you can sleep well at night. That all said, Morgan Housel, author of the wonderful book, *The Psychology of Money*, notably admits that he maintains a 20% cash position. He acknowledges that large a cash position doesn't make mathematical sense, but it suits him because it gives him comfort and helps him avoid making behavioral errors with the rest of his portfolio. So, for him, that allocation makes a lot of sense. Perhaps something similar merits your consideration. Housel's *The Psychology of Money* and Rick Ferri's *All About Asset Allocation* are two resources I'd recommend to you.
>I am 19 years old ... I'm interested in short term profits ... a few days ago I heard about something called futures trading and it seems much more simple ... It sounds as if you will need to learn these life lessons the hard way, but I will make this attempt anyway... There's an adage from the wine business: How do you make a small fortune with a winery? Start with a large fortune. The same principle applies to both options and futures trading. You're 19 years old. You have the single most precious and irreplaceable asset the universe will ever give you: Time. Every year you squander gambling in the options and futures casinos is a year of compounding growth in an index fund lost *forever*. If you want to build wealth and become financially independent, then learn how to enjoy a frugal lifestyle, maximize your savings rate, and invest in low-cost total-market index funds like VTI and VXUS. If you have an employer plan like a 401k, max that out. Max out your Roth IRA. Max out an HSA if one is available to you and you are in reasonably good health. Put the rest of your savings in a standard brokerage account. Invest all of them in index funds like VT, or VTI + VXUS. Add bond funds like BND and VTIP when it makes sense. If you can do that, then you will almost surely have a *very* comfortable future. Suggested reading: *All About Asset Allocation* by Rick Ferri
tldr: if you feel you need short term access to funds, you should probably invest in either I Bonds (not iBonds) and/or short term treasuries (SGOV/BIL/etc) and/or floating rate notes (TFLO/USFR) and/or short TIPS (VTIP), and/or money market/CDs. All of these are examples of cash-equivalent or cash-like investments. Let's start with what a bond is. In general (outside US Savings Bonds and TIPS), a bond is an agreement that the entity selling the bond (say the US government) will take some amount of your money, then periodically (usually twice yearly) give you coupon payments (interest) for a defined period of time, then after that period is expired, they give you a defined amount of money (the "par value" of the bond). Nothing here allows you to get access to your money until the bond length has expired. If you want to get access to cash, you will need to sell that bond to someone, and hence, the price will be subject to a discount or premium based on prevailing interest rates. This is the same with individual bonds and bond funds. iShares iBonds (not I Bonds) are no different here - they are bond funds with a defined maturity date. However, that defined maturity date may not actually line up with when you expect to need money. If you want quick access to money, you need a short duration bond investment - bonds that are not sensitive to interest rates. Even individual bonds have a duration, which is different than the maturity rate. If a bond duration has 1 year duration, you can expect a 1% decline in price if there's an instantaneous 1% change in interest rates. In general (except now with an inverted yield curve), you are rewarded with higher bond yield for higher duration. This makes sense - people don't want to lock up their investments without being paid for it. You will have to balance the higher yield with the higher duration. You can get investments with duration down to a few days (money market accounts) up to several decades. There's another option - I Bonds from the US Treasury (not iShares iBonds). You can only buy $10K of these per year, plus an additional $5K from your tax return. However, after one year, you can withdraw your money in them without any market price increase/discount. You will have to pay a penalty of 3 months of interest if you withdraw before five years. However, I think I Bonds are ideal for the sort of use you're describing. Other options are listed above in the tldr. I consider all of them more or less interchangeable, and they vary in duration from a few weeks to a couple years. Just remember that short term bond investments in the past few decades haven't had any significant return - think 1-2% nominal, maybe -1% (negative) to 0% real. Don't end up in a cash trap - bonds only have real return if you're willing to lock up your money. That may require some planning for the cases you're describing, and/or accepting that you may take a hit in selling your bond investment. There is no free lunch.
Hi everyone, I'm 23 looking to invest into vanguard ETFs. Now I'm a complete newbie and looking to invest into my future. I have a few questions which ETFs are worth investing long term ive heard VHYL, VTIP, VUAG and VUSA are all good opportunities. Do I invest into all four or just two? Which platform should I use I'm currently on trading 212 is this any good? Thank you.
If I was in the first decade of retirement, then my portfolio wouldn't be 100% equities. It would likely be somewhere between 30-40% bonds and in today's environment I'd probably look to roll some (but not all) of that bond allocation into TIPS, either directly with a TIPS ladder or in VTIP. About a decade into retirement, with a better handle on sequence-of-returns risk, I would be back to 100% equities to outpace inflation and grow the portfolio for my heirs. These two articles explain the strategy of a rising glide path back to 100% equities in retirement (VTI + VXUS): * [Should Equity Exposure Decrease In Retirement, Or Is A Rising Equity Glidepath Actually Better?](https://www.kitces.com/blog/should-equity-exposure-decrease-in-retirement-or-is-a-rising-equity-glidepath-actually-better/) * [The Ultimate Guide to Safe Withdrawal Rates – Part 19: Equity Glidepaths in Retirement](https://earlyretirementnow.com/2017/09/13/the-ultimate-guide-to-safe-withdrawal-rates-part-19-equity-glidepaths/) This is my own approach. Your own approach should be informed by your own finances and risk factors and with professional advice where prudent.
With yet even more bad news about inflation, why the past month is VTIP down slightly instead of up nicely? I first bought that fund three years ago, and I still don’t understand its movement.
These are not related at all. VTIP is bond ETF. TIPs. Inflation protected us gov bond that pays CPI(inflation)+ a small fixed rate. If you are very risk averse TIPs might be an option, but it has very limited real returns. VTI is the total US stock market. It buys market capitalization weighted % of the whole US stock market ( excluding private equity, obviously). Vanguard has very low tracking error and very low fees( almost 0% if you factor in things they do like security lending, etc).
Difference between VTI and VTIP?
They're inflation protected treasury bonds, literally as safe as an investment possible. When the market has a big drop, at least some of your portfolio will remain solid/increase, and it pays decent dividends. I use VTIP in my Roth.
20% up overall in 401k even after holding TIP, VTIP and VPU which were dogs. Sold the TIPs, kept the VPU as well as the rest of the portfolio which is very very tech focused.
VTIP is good too, given a potentially uncertain inflationary environment.
VOO: 38% VXUS: 22% AVUV: 20% AVDV: 10% VGSH: 5% VTIP: 3% SGOL: 2% 30, mid 7 figures invested, looking to have a 60% US / 30% International / 10% bonds/treasury/money market. I believe in small cap value tilt while understanding I want to keep things simple. I dont want to have complete US Bias. Low Fee's. Want to avoid mid cap growth I understand vxus will have some but value simplicity over. Im able to easily keep %'s aligned. Would this structure be favorable? They are structured in tax advantage*
VAIPX is the TIPS fund with the longest maturity that I'm aware of. But I'm not sure you actually want a bond fund anyway. The key point here is that when you look at the investment objective for a bond fund, it is to maintain a consistent average maturity. To achieve this the fund managers sell older bonds and buy newer ones, but they allow for quite a bit of dispersion around the average. For example, check out the [portfolio composition](https://investor.vanguard.com/investment-products/mutual-funds/profile/vaipx#portfolio-composition) for VAIPX: you'll see maturity dates everywhere from 2024 to 2052. So even if there were a 20 year TIPS fund, it would probably not hold a particularly high concentration of bonds with today's high coupons at any given time. (Also, VTIP and VAIPX will hold these bonds eventually, when they get closer to maturity.) This is probably part of why the price chart for PRAIX doesn't look like what you're expecting: the price of a long-term bond fund should be an aggregate of the prices of its underlying bonds, not necessarily the price of recently issued long-term bonds. Conclusion: if you want to lock in high TIPS interest rates, then buy TIPS! You can buy them through Vanguard and the other usual brokerage firms, so you can even hold them in an IRA if you want to avoid taxes.
Which ETF keeps up with inflation? $VTIP (Vanguard Sht-Term Inflation-Protected Securities), for example, has lost 1.5% this year, over 11% from the peak a couple of years ago. They've all lost value.
Thoughts on VTIP or SCHP, are TIPS the same as BND? or are these completely different?
Because you have made a few fundamental errors. 1. You are looking at price only and not at the coupon payments, for bonds this matters a lot, if we add back the coupon payments we get \~3% CAGR [proof](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=2&startYear=2018&firstMonth=12&endYear=2023&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&reinvestDividends=true&showYield=false&showFactors=false&factorModel=3&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=VTIP&allocation1_1=100) 2. This is still below inflation, how? Well VTIP is a bond fund so has duration risk, when interest rates go up then VTIP that has duration risk will go down. TIPS protect from inflation over the full life of the bond, in a fund it is more complex as you are buying and selling a whole slew of bonds, not just one. 3. Let's look into duration the average duration of VTIP is \~2.5 years let's then compare with VGSH with a duration of \~2 years, so a bit shorter but still comparable. VGSH has a CAGR over the period of \~0.8%, so we see the inflation protection added about \~2.2% compared to average inflation over the period \~4.2%. So the duration risk hurt, but not as bad as it could have been.
I’m going to try to explain as a layperson, to help myself clear up my understanding. Any corrections are welcome. You buy shares in a fund that owns a mix of securities that mature in < 5 years. If the interest rate goes up, the yield on new securities goes up, reducing the value of the old securities that had a lower rate. You bought shares when the fund had bonds that are now worth less. The plus side is that the yield is low higher, so you should make up your loss in time. Theoretically, with VTIP, you should get back to even before 5 years has passed. Having said that, bonds of all types have been unusually shitty the past few years, so some loss might just be “what it is.”
100% stock? 50%VTI, 25%VXUS, 25%AVUV. 60/40? 30%VTI, 15%VXUS, 15% AVUV, 40%VGIT(or 20%VGIT & 20%VTIP). There's an empirical study based reason for each ETF and allocation percentage.
As they say, no one can time the market. For all we know, the bottom of the bond market could've been on July 7th. If Powell raises rates in July, however, the bond funds are likely to drop again, at least for a decent period of time, at least 2 weeks or more... I would think. The bond market at one point already "priced in" no more rate increases, which is why I believe those funds started moving up at one point. I originally was lucky and bought into $VTIP right near the bottom, but I have since moved out as my time horizon wasn't long enough to wait on the small gains and dividend it would've provided. The longer maturity funds are the ones that will pay very well once the increases stop and eventually get lowered. That being said, I am waiting for 20+ year (think $BLV, $TLT, and even general bond funds, like $BND, etc.) to bottom so I can jump back in and do some more LEAP calls. After powell talks, that might be the best opportunity. It's going to be free money, like when he announced when they were going to start raising rates over a year and a half ago. My bond positions are as follows: ~50% of port to 3-18 month Treasuries and CDs at around 5.3% on average ~2% of port to $FIJEX Several $TLT 1/19/24 $105C Several $TLT 1/19/24 $95P Several $TLT 7/28/24 $100P I'm hoping to pick up 800 shares of TMF at around $6.50.