Personal Investments • TIPS or not for a 5 year ladder?

Hello OP,
Does your personal rate of inflation match the TIPS index?

Don't really know. Its our first year of retirement and our spending pattern is already significantly diverging from prior years. More of our expenses will be inflation-coupled than nominal. Even if our personal rate of inflation doesn't match how TIPS does the calculations, I'm not currently aware of alternative investment products that might be more tightly aligned to our personal inflation rate.

Curious to hear what prompted the question, and how a more accurate response on my part might have led to advice along one path or another.

Hi OP,
The same entity you are loaning a significant portion of your money to not only determines what the rate of inflation “is” but they also determine what you are paid with TIPS. They are not tracking your spending so there is a good possibility you may come up short of your expectations. It really depends on the amount of money you are wanting to put into TIPS. The equity side of your portfolio will more than likely do a better job of keeping up with your inflation.

And what happens if the equity side takes a 25% hit in a bad year? Are you suggesting that someone in retirement should depend on equities to cover spending?

Hi Tom,
I am suggesting that equities will provide returns that more closely match personal inflation than TIPS.
In addition, TIPS values can drop too.
As an example Taylor has not advocated for TIPS in his 3 fund portfolio.
He did not annuitize a portion of his portfolio until he was in his 80's. He wanted to simplify even further, not because it wasn't working.

Statistics: Posted by Tom_T — Fri Feb 23, 2024 5:18 am — Replies 36 — Views 3143