Bond Question: Substitute VBTLX (Vanguard Total Bond Market Index) for TIPS?
Bond Question: Substitute VBTLX (Vanguard Total Bond Market Index) for TIPS?
Hello!
-Currently in early thirties.
-Portfolio $300k
-Asset Allocation: 90% equities/10% Bonds
Currently the $30k bond investment is in the 401k invested in VBTLX (Vanguard Total Bond Market Index Fund)
Questions:
1) I discovered TIPS from this forum recently and they appear to provide significantly more return than VBTLX. Should I liquidate the VBTLX position and replace them with TIPS instead?
2) Assuming the answer to question 1 is yes, what retirement vehicle should I buy the TIPS in? 401k, Roth IRA, Traditional IRA, Taxable are all available options.
Doing more research on TIPS as I just recently discovered them, but hoping the forum would have some advice for me. Thank you in advance!
-Currently in early thirties.
-Portfolio $300k
-Asset Allocation: 90% equities/10% Bonds
Currently the $30k bond investment is in the 401k invested in VBTLX (Vanguard Total Bond Market Index Fund)
Questions:
1) I discovered TIPS from this forum recently and they appear to provide significantly more return than VBTLX. Should I liquidate the VBTLX position and replace them with TIPS instead?
2) Assuming the answer to question 1 is yes, what retirement vehicle should I buy the TIPS in? 401k, Roth IRA, Traditional IRA, Taxable are all available options.
Doing more research on TIPS as I just recently discovered them, but hoping the forum would have some advice for me. Thank you in advance!
Re: Bond Question: Substitute VBTLX (Vanguard Total Bond Market Index) for TIPS?
Do nothing. Stay the course. VBTLX (in, ideally, a 401[k]) is fine.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Re: Bond Question: Substitute VBTLX (Vanguard Total Bond Market Index) for TIPS?
Sounds good! Thank you for the reply! I only recently added bonds to the portfolio, so not 100% confident I picked the correct retirement vehicle/bond fund, but it sounds like VBTLX in the 401k is fine. Thanks again!
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- Posts: 1672
- Joined: Sun Sep 27, 2020 6:20 pm
Re: Bond Question: Substitute VBTLX (Vanguard Total Bond Market Index) for TIPS?
I-bonds are currently paying 7.2%. You can buy $10k now and $10k in January. $5k from tax return. They are currently TIPS on steroids.sw5318 wrote: ↑Sat Dec 04, 2021 9:34 pm Hello!
-Currently in early thirties.
-Portfolio $300k
-Asset Allocation: 90% equities/10% Bonds
Currently the $30k bond investment is in the 401k invested in VBTLX (Vanguard Total Bond Market Index Fund)
Questions:
1) I discovered TIPS from this forum recently and they appear to provide significantly more return than VBTLX. Should I liquidate the VBTLX position and replace them with TIPS instead?
2) Assuming the answer to question 1 is yes, what retirement vehicle should I buy the TIPS in? 401k, Roth IRA, Traditional IRA, Taxable are all available options.
Doing more research on TIPS as I just recently discovered them, but hoping the forum would have some advice for me. Thank you in advance!
I believe they might be an ideal match for your portfolio.
Other than that for a young investor I see no need to switch from VBTLX to TIPS, the difference is insignificant.
25% VTI | 25% VXUS | 12.5% AVUV | 10% AVDV | 2.5% VWO | 25% BND/SCHR/SCHP
Re: Bond Question: Substitute VBTLX (Vanguard Total Bond Market Index) for TIPS?
You'll be fine; don't overthink it.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Re: Bond Question: Substitute VBTLX (Vanguard Total Bond Market Index) for TIPS?
I actually thought TIPS and I-bonds were the same thing. Haha... But it sounds like they are actually different?ivgrivchuck wrote: ↑Sat Dec 04, 2021 9:46 pmI-bonds are currently paying 7.2%. You can buy $10k now and $10k in January. $5k from tax return. They are currently TIPS on steroids.sw5318 wrote: ↑Sat Dec 04, 2021 9:34 pm Hello!
-Currently in early thirties.
-Portfolio $300k
-Asset Allocation: 90% equities/10% Bonds
Currently the $30k bond investment is in the 401k invested in VBTLX (Vanguard Total Bond Market Index Fund)
Questions:
1) I discovered TIPS from this forum recently and they appear to provide significantly more return than VBTLX. Should I liquidate the VBTLX position and replace them with TIPS instead?
2) Assuming the answer to question 1 is yes, what retirement vehicle should I buy the TIPS in? 401k, Roth IRA, Traditional IRA, Taxable are all available options.
Doing more research on TIPS as I just recently discovered them, but hoping the forum would have some advice for me. Thank you in advance!
I believe they might be an ideal match for your portfolio.
Other than that for a young investor I see no need to switch from VBTLX to TIPS, the difference is insignificant.
And yes, the 7.2% interest rate I-bonds are paying is what inspired me to create this thread. I just feel extremely uniformed on the bond side of the equation vs. equities, so I wanted to make sure I wasn't investing in an inferior product with VLBTX. Probably just going to stick w/ the VBLTX for the simplicity and my general lack of understanding on the I-bond. Thank you for your reply!
-
- Posts: 1672
- Joined: Sun Sep 27, 2020 6:20 pm
Re: Bond Question: Substitute VBTLX (Vanguard Total Bond Market Index) for TIPS?
If you want extreme simplicity then VBTLX is the right choice.sw5318 wrote: ↑Sat Dec 04, 2021 10:20 pmI actually thought TIPS and I-bonds were the same thing. Haha... But it sounds like they are actually different?ivgrivchuck wrote: ↑Sat Dec 04, 2021 9:46 pmI-bonds are currently paying 7.2%. You can buy $10k now and $10k in January. $5k from tax return. They are currently TIPS on steroids.sw5318 wrote: ↑Sat Dec 04, 2021 9:34 pm Hello!
-Currently in early thirties.
-Portfolio $300k
-Asset Allocation: 90% equities/10% Bonds
Currently the $30k bond investment is in the 401k invested in VBTLX (Vanguard Total Bond Market Index Fund)
Questions:
1) I discovered TIPS from this forum recently and they appear to provide significantly more return than VBTLX. Should I liquidate the VBTLX position and replace them with TIPS instead?
2) Assuming the answer to question 1 is yes, what retirement vehicle should I buy the TIPS in? 401k, Roth IRA, Traditional IRA, Taxable are all available options.
Doing more research on TIPS as I just recently discovered them, but hoping the forum would have some advice for me. Thank you in advance!
I believe they might be an ideal match for your portfolio.
Other than that for a young investor I see no need to switch from VBTLX to TIPS, the difference is insignificant.
And yes, the 7.2% interest rate I-bonds are paying is what inspired me to create this thread. I just feel extremely uniformed on the bond side of the equation vs. equities, so I wanted to make sure I wasn't investing in an inferior product with VLBTX. Probably just going to stick w/ the VBLTX for the simplicity and my general lack of understanding on the I-bond. Thank you for your reply!
I-bonds are probably the optimal choice.
25% VTI | 25% VXUS | 12.5% AVUV | 10% AVDV | 2.5% VWO | 25% BND/SCHR/SCHP
Re: Bond Question: Substitute VBTLX (Vanguard Total Bond Market Index) for TIPS?
My own take: there will be a minimal difference in return between iBonds and VBTLX over a several-decades period.ivgrivchuck wrote: ↑Sat Dec 04, 2021 10:24 pmIf you want extreme simplicity then VBTLX is the right choice.sw5318 wrote: ↑Sat Dec 04, 2021 10:20 pmI actually thought TIPS and I-bonds were the same thing. Haha... But it sounds like they are actually different?ivgrivchuck wrote: ↑Sat Dec 04, 2021 9:46 pmI-bonds are currently paying 7.2%. You can buy $10k now and $10k in January. $5k from tax return. They are currently TIPS on steroids.sw5318 wrote: ↑Sat Dec 04, 2021 9:34 pm Hello!
-Currently in early thirties.
-Portfolio $300k
-Asset Allocation: 90% equities/10% Bonds
Currently the $30k bond investment is in the 401k invested in VBTLX (Vanguard Total Bond Market Index Fund)
Questions:
1) I discovered TIPS from this forum recently and they appear to provide significantly more return than VBTLX. Should I liquidate the VBTLX position and replace them with TIPS instead?
2) Assuming the answer to question 1 is yes, what retirement vehicle should I buy the TIPS in? 401k, Roth IRA, Traditional IRA, Taxable are all available options.
Doing more research on TIPS as I just recently discovered them, but hoping the forum would have some advice for me. Thank you in advance!
I believe they might be an ideal match for your portfolio.
Other than that for a young investor I see no need to switch from VBTLX to TIPS, the difference is insignificant.
And yes, the 7.2% interest rate I-bonds are paying is what inspired me to create this thread. I just feel extremely uniformed on the bond side of the equation vs. equities, so I wanted to make sure I wasn't investing in an inferior product with VLBTX. Probably just going to stick w/ the VBLTX for the simplicity and my general lack of understanding on the I-bond. Thank you for your reply!
I-bonds are probably the optimal choice.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
-
- Posts: 1672
- Joined: Sun Sep 27, 2020 6:20 pm
Re: Bond Question: Substitute VBTLX (Vanguard Total Bond Market Index) for TIPS?
VBTLX is expected to return more than i-bonds in the very long term since it has more risk than i-bonds.mikejuss wrote: ↑Sat Dec 04, 2021 10:28 pmMy own take: there will be a minimal difference in return between iBonds and VBTLX over a several-decades period.ivgrivchuck wrote: ↑Sat Dec 04, 2021 10:24 pmIf you want extreme simplicity then VBTLX is the right choice.sw5318 wrote: ↑Sat Dec 04, 2021 10:20 pmI actually thought TIPS and I-bonds were the same thing. Haha... But it sounds like they are actually different?ivgrivchuck wrote: ↑Sat Dec 04, 2021 9:46 pmI-bonds are currently paying 7.2%. You can buy $10k now and $10k in January. $5k from tax return. They are currently TIPS on steroids.sw5318 wrote: ↑Sat Dec 04, 2021 9:34 pm Hello!
-Currently in early thirties.
-Portfolio $300k
-Asset Allocation: 90% equities/10% Bonds
Currently the $30k bond investment is in the 401k invested in VBTLX (Vanguard Total Bond Market Index Fund)
Questions:
1) I discovered TIPS from this forum recently and they appear to provide significantly more return than VBTLX. Should I liquidate the VBTLX position and replace them with TIPS instead?
2) Assuming the answer to question 1 is yes, what retirement vehicle should I buy the TIPS in? 401k, Roth IRA, Traditional IRA, Taxable are all available options.
Doing more research on TIPS as I just recently discovered them, but hoping the forum would have some advice for me. Thank you in advance!
I believe they might be an ideal match for your portfolio.
Other than that for a young investor I see no need to switch from VBTLX to TIPS, the difference is insignificant.
And yes, the 7.2% interest rate I-bonds are paying is what inspired me to create this thread. I just feel extremely uniformed on the bond side of the equation vs. equities, so I wanted to make sure I wasn't investing in an inferior product with VLBTX. Probably just going to stick w/ the VBLTX for the simplicity and my general lack of understanding on the I-bond. Thank you for your reply!
I-bonds are probably the optimal choice.
25% VTI | 25% VXUS | 12.5% AVUV | 10% AVDV | 2.5% VWO | 25% BND/SCHR/SCHP
Re: Bond Question: Substitute VBTLX (Vanguard Total Bond Market Index) for TIPS?
So the people on this board who are drunk on iBonds need a shot of ice water.ivgrivchuck wrote: ↑Sat Dec 04, 2021 10:50 pmVBTLX is expected to return more than i-bonds in the very long term since it has more risk than i-bonds.mikejuss wrote: ↑Sat Dec 04, 2021 10:28 pmMy own take: there will be a minimal difference in return between iBonds and VBTLX over a several-decades period.ivgrivchuck wrote: ↑Sat Dec 04, 2021 10:24 pmIf you want extreme simplicity then VBTLX is the right choice.sw5318 wrote: ↑Sat Dec 04, 2021 10:20 pmI actually thought TIPS and I-bonds were the same thing. Haha... But it sounds like they are actually different?ivgrivchuck wrote: ↑Sat Dec 04, 2021 9:46 pm
I-bonds are currently paying 7.2%. You can buy $10k now and $10k in January. $5k from tax return. They are currently TIPS on steroids.
I believe they might be an ideal match for your portfolio.
Other than that for a young investor I see no need to switch from VBTLX to TIPS, the difference is insignificant.
And yes, the 7.2% interest rate I-bonds are paying is what inspired me to create this thread. I just feel extremely uniformed on the bond side of the equation vs. equities, so I wanted to make sure I wasn't investing in an inferior product with VLBTX. Probably just going to stick w/ the VBLTX for the simplicity and my general lack of understanding on the I-bond. Thank you for your reply!
I-bonds are probably the optimal choice.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
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- Posts: 1672
- Joined: Sun Sep 27, 2020 6:20 pm
Re: Bond Question: Substitute VBTLX (Vanguard Total Bond Market Index) for TIPS?
Not so fast. The fact that asset A has a higher expected return than asset B in the very long term doesn't directly mean that asset A is a better investment than asset B. Otherwise 100% UPRO would be the only logical investment optionmikejuss wrote: ↑Sat Dec 04, 2021 10:58 pmSo the people on this board who are drunk on iBonds need a shot of ice water.ivgrivchuck wrote: ↑Sat Dec 04, 2021 10:50 pm VBTLX is expected to return more than i-bonds in the very long term since it has more risk than i-bonds.
25% VTI | 25% VXUS | 12.5% AVUV | 10% AVDV | 2.5% VWO | 25% BND/SCHR/SCHP
Re: Bond Question: Substitute VBTLX (Vanguard Total Bond Market Index) for TIPS?
You are not going to magically enhance your wealth, your retirement income, or anything else trying to play games that you picked a total bond fund, a TIPS fund, or put everything in I bonds. It is perfectly reasonable to hold any of those or perhaps to hold maybe half your fixed income TIPS and half in nominal bonds. Naturally fixed income tends to be better held in tax protected accounts except that I bond interest is tax deferred for 30 years. If that 30 years hits at a time when you have a high tax rate you can have also paid off the taxes along the way.
Disclaimer: I hold half of fixed income in intermediate Treasuries and half in intermediate TIPS. That doesn't mean anyone else should.
Disclaimer: I hold half of fixed income in intermediate Treasuries and half in intermediate TIPS. That doesn't mean anyone else should.
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Re: Bond Question: Substitute VBTLX (Vanguard Total Bond Market Index) for TIPS?
How can you not be drunk on I Bonds when both nominal bonds and TIPS suffer from 'financial repression’ -- the suppression of interest rates below the rate of inflation. Only I Bonds haven't been dragged into the morass. They're free lunch. I'm not only drunk on I Bonds, I'm naked cartwheels drunk on them.