- Municipal bonds (VTEB) in my taxable accounts
- Corporate bonds (VTC equivalent) in my Traditional 401k
AllianceBernstein has this, but it looks like 1) there's loaded versions with sales charges, etc., and 2) it looks monstrously expensive.
Badger1754:Badger1754 wrote: ↑Sat Jan 15, 2022 2:11 pm I currently have the fixed income portion of my highly-disciplined three-fund portfolio split between (for optimal tax efficiency):It occurred to me that with inflation being what it is, and unlikely to get better in the near term, that a case might be made to swap to inflation-protected bonds. So my question is, is there a Municipal Inflation-Protected Bond ETF or fund that you might consider (for the taxable account; there's already an inflation-protected option in my Traditional 401k)?
- Municipal bonds (VTEB) in my taxable accounts
- Corporate bonds (VTC equivalent) in my Traditional 401k
AllianceBernstein has this, but it looks like 1) there's loaded versions with sales charges, etc., and 2) it looks monstrously expensive.
Jack Bogle's Words of Wisdom: "There may be better investment strategies than owning just three broad-based index funds but the number of strategies that are worse is infinite."
Hi Vince -vineviz wrote: ↑Sat Jan 15, 2022 2:31 pm It’s hard to give specific advice without the full picture.
If you’re not retired or very close to retirement you probably get little benefit from TIPS.
If stocks represent a strong majority of your portfolio you might not need TIPS.
Also, investing is a lot like driving on a curvy road: you should make course corrections based on what you see through the windshield and not what you see in the rear view mirror.
Taylor, as always, thank you!Taylor Larimore wrote: ↑Sat Jan 15, 2022 2:45 pm If you look at historical returns for the Three-Fund Portfolio here, you will see that your Three-Fund Portfolio did quite well during the late 70s when inflation was double digit. I would stay-the-course.
Hmm. I see it a bit differently. Granted this is difficult to achieve -- that we have only so many pennies to put away into our piggy banks -- and you may not be able to "get there from here." Still, the end goal is to arrive at a stream of income in retirement. If I say that I need 50k per year to survive for x years of retirement, and I am able to buy x years of a TIPS ladder of 50k a year, then I win the game. Risk equals zero, given my assumptions about amount needed and number of years is correct. (Big IF).dbr wrote: ↑Mon Jan 17, 2022 10:04 am A note on the TIPS LMP: That is a general idea that makes sense if a person wants to provide an inflation indexed certain income stream for a period of time. Unfortunately it is not risk free. The risk is historical risk that the benefit depends on buying the ladder when real yields are favorable. Today they are not favorable. At -2% real yield the LMP delivers a payout of 2.4%. At +2% real yield the payout is 4.4%. At 0% real yield the payout is 3.3%.
Yes, all of this is right. It really says that you can't escape historical risk, meaning that you have to deal with what you have at the time you have it. In any case the expense of a TIPS ladder is known up front, so you have a low risk option. At the same time the usual 4% SWR for risky investments is also an acknowledgement that you might have started at a bad time. The problem is that you don't know what kind of time it is until it is too late. Generally it is expensive to reduce risk.Dude2 wrote: ↑Mon Jan 17, 2022 12:52 pmHmm. I see it a bit differently. Granted this is difficult to achieve -- that we have only so many pennies to put away into our piggy banks -- and you may not be able to "get there from here." Still, the end goal is to arrive at a stream of income in retirement. If I say that I need 50k per year to survive for x years of retirement, and I am able to buy x years of a TIPS ladder of 50k a year, then I win the game. Risk equals zero, given my assumptions about amount needed and number of years is correct. (Big IF).dbr wrote: ↑Mon Jan 17, 2022 10:04 am A note on the TIPS LMP: That is a general idea that makes sense if a person wants to provide an inflation indexed certain income stream for a period of time. Unfortunately it is not risk free. The risk is historical risk that the benefit depends on buying the ladder when real yields are favorable. Today they are not favorable. At -2% real yield the LMP delivers a payout of 2.4%. At +2% real yield the payout is 4.4%. At 0% real yield the payout is 3.3%.
It didn't mean that the price for that TIPS ladder was a bit steeper than I wanted to pay for it. Like Merton tried to argue, I just want to acknowledge that people with sufficient assets that can stop playing the game (stop investing in a risk portfolio) can. There seems to be a large number of people on the forum that fit this description, including perhaps the OP, but it's as if they don't know they can do that. A TIPS LMP is a possible solution.
Your point may be that any deviation from a risk portfolio during accumulation, i.e. to bend over backwards to include a TIPS ladder, is risky and is time sensitive to real rates. Fair enough.
Put another way, solving backwards, we can arrive at what we need in a TIPS ladder when retirement starts and remove all risk. Accumulating enough to make it happen is where we must take risk.
Question, if somebody is going to hold bonds as part of their risk portfolio, is it wrong to suggest they start chunking away TIPS?