“Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

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Re: Bogleheads’ Guide To Investing - Sample Portfolios

Post by vineviz »

Mel Lindauer wrote: Thu Jun 10, 2021 5:07 pm How hard is it to say "All Treasury issues, except I Bonds, currently have negative real rates"?
It’s not a question of being “hard”.

It’s a question of understanding that words mean what people accept them to mean, and people accept the word “Treasuries” to refer specifically to marketable securities.
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by nisiprius »

If we're going to be pedantic, the correct spelling of Treasurys is the spelling I just used.

Lately I've been trying to word my posts so as to avoid using the plural of the word "Treasury:" "Treasury issues" or "Treasury securities" because the spelling "Treasurys" really grates on me.
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Re: Bogleheads’ Guide To Investing - Sample Portfolios

Post by neurosphere »

Mel Lindauer wrote: Thu Jun 10, 2021 5:07 pm
vineviz wrote: Thu Jun 10, 2021 6:57 am
Mel Lindauer wrote: Thu Jun 10, 2021 12:03 am I'm just being factual on a forum that prides itself on providing correct information. The statements that were made were factually incorrect and needed clarification. "Silly" is providing incorrect information if you know better.

Nothing silly about saying that all Treasuries except I Bonds are providing a negative real return at this time, if that's the case. Folks need to be informed when there's something from the Treasury that doesn't have, and can't have, a negative real return. Simple as that.
It's possible to be both factual AND pedantic.

"Treasuries" means "marketable Treasury securities" to pretty much everyone in the financial services industry. The Treasury department issues many types of securities that aren't marketable, any informed reader will know that the simple phrase "Treasuries" refers only to the marketable securities.
Lots of folks who come here for factual guidance are actually novices, rather than "informed readers", and we need to remember that and post accordingly. Facts are facts. Informed posters shouldn't automatically assume (there's that word) that everyone can understand what they really mean.

How hard is it to say "All Treasury issues, except I Bonds, currently have negative real rates"?
Way back when I was a "reader". Was I "informed"? Probably not. Am I now "informed"? Maybe, but perhaps not enough.

Perhaps we can agree that there is a GIANT range in the knowledge/experience/education/etc of Bogleheads readers. And that we simply all need to remember that fact. When we write a post, we are either 1) asking a question so just ask away 2) answering a question so direct the answer to the what one things is the level of understanding of the OP 3) offering our own knowledge/opinion/etc of a relevant topic, but knowing that the "readers" of such a post span the widest range of knowledge.

No one necessarily needs to "dumb down" a post. Similarly, no one need be concerned about offending anyone else that a post is too basic or seems condescending. But, we should all simply appreciate that BH readers represent an enormous range of knowledge/understanding. This site is all about education. There is something for everyone. :D :sharebeer

I think that there are actually a very trivial few "bad actors" on BH. 1 in 100,000? I don't think i've encountered a "bad guy" during my 10+ years here. We all have our own way of writing, our own focus, our own points of emphasis, our own assumptions of what others should already know or not know.

That's what makes this forum great/amazing. There is knowledge here for EVERYONE. Personally, I don't write worry that i'm writing for "informed posters". Instead, I try to address questions/topics in a way that might inform/educate a wide range of people. If I talk "above" anyone I hope they will ask clarifying questions. If I talk "beneath" anyone, I hope they'll understand it's not intentional. Such is the nature of a "crowdsourced" information site such as this one.

:D :D
Last edited by neurosphere on Fri Jun 11, 2021 1:49 pm, edited 1 time in total.
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Re: Bogleheads’ Guide To Investing - Sample Portfolios

Post by neurosphere »

vineviz wrote: Thu Jun 10, 2021 5:53 pm
Mel Lindauer wrote: Thu Jun 10, 2021 5:07 pm How hard is it to say "All Treasury issues, except I Bonds, currently have negative real rates"?
It’s not a question of being “hard”.

It’s a question of understanding that words mean what people accept them to mean, and people accept the word “Treasuries” to refer specifically to marketable securities.
I'm fairly financially savvy. And I THINK I know what "marketable securities" mean, but hmm...not really sure. Both the term marketable, and securities, might be confusing to lots of BH readers. As might "Treasuries". I'm not taking any sides or anything like that. But wow, it took me 10+ years to understand what CNBC meant by the fact that bond values fall when interest rates rise. The amazing/wonderful (and simultaneously annoying) thing about BH is the enormous diversity in readership. :wink:
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by MishkaWorries »

nisiprius wrote: Thu Jun 10, 2021 8:26 pm If we're going to be pedantic, the correct spelling of Treasurys is the spelling I just used.
Words that end in "y" and are preceded with a constant will take the "-ies" ending to make it plural. The exception is proper nouns will take an "s", i.e. "the Murphys".

Wouldn't it be "Teasurys" if referring to the plural (if that is possible) of The United States Department of the Treasury (proper noun) and "treasuries" when using that would as a group noun for bills, notes and bonds issued by the US Treasury?
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by vineviz »

MishkaWorries wrote: Thu Jun 10, 2021 9:35 pm
nisiprius wrote: Thu Jun 10, 2021 8:26 pm If we're going to be pedantic, the correct spelling of Treasurys is the spelling I just used.
Words that end in "y" and are preceded with a constant will take the "-ies" ending to make it plural. The exception is proper nouns will take an "s", i.e. "the Murphys".

Wouldn't it be "Teasurys" if referring to the plural (if that is possible) of The United States Department of the Treasury (proper noun) and "treasuries" when using that would as a group noun for bills, notes and bonds issued by the US Treasury?
Yes, "Treasuries" is the correct spelling when referring a securities issued by the U.S. Treasury Department.

At the very least it is the official spelling used BY the U.S. Treasury Department. E.g.:
The U.S. Treasury market is the deepest and most liquid government securities market in the world. Treasuries play a unique role in the global economy, serving as the primary means of financing the U.S. federal government, a critical store of value and hedging vehicle for global investors and savers, the key risk-free benchmark for other financial instruments, and an important conduit for the Federal Reserve’s implementation of monetary policy.
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by countmein »

Haven't seen a thread go this far off the rails in a while.
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by neurosphere »

I started out with 50% of bonds in TIPS 20 years ago, likely as a consequence of when I started investing and the conventional wisdom at that time. Despite all the talk of TIPS not being that great (anymore?) during accumulation I held onto that allocation, thinking it had been 15+ years so just stick with it for 30+ more! :D

However, I recently found I have access to a 3% guaranteed stable value type fund (TIAA traditional, of a flavor with no liquidity restrictions. So I moved a huge chunk of bonds from TIPS to the TIAA traditional. Maybe this was the wrong time to do that? Or maybe not. I have no idea, but 3% guaranteed appealed to be relative to other options in nominal bonds. If inflation takes off maybe I will have wished I still had more TIPS. But if inflation takes off "later", perhaps I will have been compensated enough at 3% for a while to make up for future inflation? Predicting the future makes my head hurt. :confused
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by nedsaid »

nisiprius wrote: Thu Jun 10, 2021 8:26 pm If we're going to be pedantic, the correct spelling of Treasurys is the spelling I just used.

Lately I've been trying to word my posts so as to avoid using the plural of the word "Treasury:" "Treasury issues" or "Treasury securities" because the spelling "Treasurys" really grates on me.
Sort of like the way I felt when the name of the "U.S. Stocks in freefall" thread got changed to "U.S. Stocks in free fall." I have always used the spelling of treasuries and not treasurys, so I feel that sort of a sacred tradition has been violated. Even the spellchecker at the forum underlines "treasurys" in red, just like Mrs. Woodward, my 7th grade English teacher would have done. So even the spellchecker disagrees with you here. :wink:
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by nisiprius »

The spelling as Treasurys isn't as universal as I thought, so I apologize for suggesting that the use of the spelling Treasuries was incorrect.

The Wall Street Journal uses Treasurys: Renewed Demand for Treasurys Quells Fears of Rising Rates—for Now.

So does The Washington Post: Fed announces unlimited bond purchases...
The Fed is attempting to resolve this by buying unlimited amounts of U.S. Treasurys and mortgage-backed securities...
So does The New York Times: Investors are Focussed on Treasurys. Here's What the Fed Could Do.

So does CNBC:
...the "misspelling" is on purpose, done to differentiate Treasury bonds from the plural for the Department of Treasury, though I'm not sure why you'd ever need to pluralize that...
But Forbes says:
Treasuries vs Treasurys

When reading about a group of 10-year Treasuries, you may see it written one of two ways: Treasuries or Treasurys­. This unorthodox plural, spelled with -ys instead of the conventional -ies, is used by many financial and media outlets. There aren’t any good explanations for this tendency, but publications like CNBC and The Wall Street Journal spell it -ys.
And Merriam-Webster says the plural of "treasury" (uncapitalized) is "treasuries," but for meaning #3 says:
Treasury plural also Treasurys : a government security (such as a note or bill) issued by the Treasury.
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by Mel Lindauer »

nisiprius wrote: Sat Jun 12, 2021 9:26 pm The spelling as Treasurys isn't as universal as I thought, so I apologize for suggesting that the use of the spelling Treasuries was incorrect.

The Wall Street Journal uses Treasurys: Renewed Demand for Treasurys Quells Fears of Rising Rates—for Now.

So does The Washington Post: Fed announces unlimited bond purchases...
The Fed is attempting to resolve this by buying unlimited amounts of U.S. Treasurys and mortgage-backed securities...
So does The New York Times: Investors are Focussed on Treasurys. Here's What the Fed Could Do.

So does CNBC:
...the "misspelling" is on purpose, done to differentiate Treasury bonds from the plural for the Department of Treasury, though I'm not sure why you'd ever need to pluralize that...
But Forbes says:
Treasuries vs Treasurys

When reading about a group of 10-year Treasuries, you may see it written one of two ways: Treasuries or Treasurys­. This unorthodox plural, spelled with -ys instead of the conventional -ies, is used by many financial and media outlets. There aren’t any good explanations for this tendency, but publications like CNBC and The Wall Street Journal spell it -ys.
And Merriam-Webster says the plural of "treasury" (uncapitalized) is "treasuries," but for meaning #3 says:
Treasury plural also Treasurys : a government security (such as a note or bill) issued by the Treasury.
So, bottom line, take your choice and let everyone spell it however they choose to do so.
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by ApeAttack »

Despite the occasional heated posts, I'm grateful this forum exists. Without it, I wouldn't have known about I-Bonds (which I'm now using for part of my emergency fund) or TIPS (which I'm now using in my tax-deferred accounts).

In this thread alone, I've learned a lot of useful information about TIPS and it has given me a lot of ammunition to do my own research.

Last year, I made a donation to this website and plan on doing so again this year. Bogleheads.org is what the internet should be about -- people sharing ideas in a constructive manner.
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by Jnick55 »

I agree completely with ApeAttack. This is the best moderated, most intelligent message board I have found on matters of personal finance. I owe almost my entire education on that topic to the depth and quality of this board. I, too, donate in gratitude to this site.
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by retireIn2020 »

I came across this thread and it has me thinking about allocating a portion of my Bond holdings to TIPS. I've never really thought about them but now retired and looking at current yields, TIPS don't sound too bad :happy
Current Bond allocation is in my 401k and mainly in stable value (70%)and total bond(30%).

I don't have an inflation protected option in the 401k so I'm thinking of rolling a portion to an tIRA and I like the exp. ratio for the Schwab Treasury Infl Protected Secs Idx SWRSX. Any other suggestions?

SWRSX 1 year return is currently 3.83%

BND 1 year return is currently -1.96%
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by Da5id »

retireIn2020 wrote: Sat Aug 28, 2021 1:12 pm I don't have an inflation protected option in the 401k so I'm thinking of rolling a portion to an tIRA and I like the exp. ratio for the Schwab Treasury Infl Protected Secs Idx SWRSX. Any other suggestions?

SWRSX 1 year return is currently 3.83%

BND 1 year return is currently -1.96%
I have some TIPS (VAIPX). But also worth considering I-bonds, as they don't use tax free/tax-deferred space up.

Your mention of 1 year returns for bond funds with durations many times that makes me a bit concerned about your rationale for changing your asset allocation. That makes it feel like it could be more like "bond performance chasing" rather than a portfolio level decision that you need some inflation indexed bonds?
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by Beardog »

I am married. Soon to be 59 years old. My wife has always been a homemaker. We have reached financial independence. I may retire soon, and I may work for a few more years. I can do what I want. We have had a longtime 60/40 overall allocation. We have held bonds at 50/50 TIPS fund/Total bond fund (both Vanguard) for at least 15 years. Lately, I have drifted the bond portion of our portfolio up to about 60/40 Tips/Total Bond. Why? Because we see bonds as principal protection. We want no significant risk in bonds. Seen from that perspective, then 100% TIPS would be totally acceptable to us. Unexpected inflation is perhaps our own biggest fear, not expected inflation. If we make a lot of extra money in stocks, so be it. If we lose a great deal of money in stocks, so be it. We have a safe 12-15 years of annual spending (not just yearly bare bones, absolute necessity coverage) in bonds, and sleep well at night. If we had to spend nothing but bonds for the next 15 years, we would be almost 75 years old, and no doubt would have made some major financial adjustments along the way. And this is all without factoring in a significant Social Security paycheck(s) at 67 and 70 years of age. So, the real answer, as usual, is "it depends on the individual or couple's unique situation".
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by retireIn2020 »

Da5id wrote: Sat Aug 28, 2021 1:47 pm
retireIn2020 wrote: Sat Aug 28, 2021 1:12 pm I don't have an inflation protected option in the 401k so I'm thinking of rolling a portion to an tIRA and I like the exp. ratio for the Schwab Treasury Infl Protected Secs Idx SWRSX. Any other suggestions?

SWRSX 1 year return is currently 3.83%

BND 1 year return is currently -1.96%
I have some TIPS (VAIPX). But also worth considering I-bonds, as they don't use tax free/tax-deferred space up.

Your mention of 1 year returns for bond funds with durations many times that makes me a bit concerned about your rationale for changing your asset allocation. That makes it feel like it could be more like "bond performance chasing" rather than a portfolio level decision that you need some inflation indexed bonds?
Sorry, maybe I wasn't clear enough, I have no intention of changing my stock/bond asset allocation. My thought is to move money from my 401k bond allocation to a TIP's fund in an tIRA so my bond portion of my portfolio would end up 33% SWRSX (TIPS fund), 33% Total Bond , 34% stable value for 100% of my bond allocation which is 50% of my portfolio of 50/50 stock/bond.

My concern isn't so much chasing bond performance, it's like Beardog said "unexpected inflation" . As I mentioned in my post (not in your quote) I've never looked at tips and not really familiar with them until reading this thread. I thought they would be a good fit, are you saying that a funds like SWRSX/VAIPX are not considered part of a bond allocation? :confused

Also, I do not have a taxable brokerage account, except for checking account, my entire portfolio is tax advantaged.
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by Da5id »

retireIn2020 wrote: Sat Aug 28, 2021 4:17 pm
Da5id wrote: Sat Aug 28, 2021 1:47 pm
retireIn2020 wrote: Sat Aug 28, 2021 1:12 pm I don't have an inflation protected option in the 401k so I'm thinking of rolling a portion to an tIRA and I like the exp. ratio for the Schwab Treasury Infl Protected Secs Idx SWRSX. Any other suggestions?

SWRSX 1 year return is currently 3.83%

BND 1 year return is currently -1.96%
I have some TIPS (VAIPX). But also worth considering I-bonds, as they don't use tax free/tax-deferred space up.

Your mention of 1 year returns for bond funds with durations many times that makes me a bit concerned about your rationale for changing your asset allocation. That makes it feel like it could be more like "bond performance chasing" rather than a portfolio level decision that you need some inflation indexed bonds?
Sorry, maybe I wasn't clear enough, I have no intention of changing my stock/bond asset allocation. My thought is to move money from my 401k bond allocation to a TIP's fund in an tIRA so my bond portion of my portfolio would end up 33% SWRSX (TIPS fund), 33% Total Bond , 34% stable value for 100% of my bond allocation which is 50% of my portfolio of 50/50 stock/bond.

My concern isn't so much chasing bond performance, it's like Beardog said "unexpected inflation" . As I mentioned in my post (not in your quote) I've never looked at tips and not really familiar with them until reading this thread. I thought they would be a good fit, are you saying that a funds like SWRSX/VAIPX are not considered part of a bond allocation? :confused

Also, I do not have a taxable brokerage account, except for checking account, my entire portfolio is tax advantaged.
I think TIPs can be good. Sure. If you are concerned about "unexpected inflation" *for the long term*. Because it can presumably creep up on us without notice. SWRSX has had similar returns to BND since inception though with much more volatility.

I was just worrying that your citing the 1 year returns of SWRSX and BND was a reflection of an unreasonable focus in the past year's returns rather than a change of strategy for the long haul.
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by Dude2 »

Just some general ideas for consideration. The TIPS market is small. There are only so many born by the government per year. Some people believe there is a liquidity issue with TIPS and this is why there have been several instances in crisis times where their performance has not lived up to theory -- not that in the longer run they didn't bounce back to where they should be. So, part of the reason that 401k plans, life cycle funds, target date funds, etc. do not include TIPS (for the most part) is the scarcity of them in the overall bond universe. Therefore, by deciding to go "out of your way" to invest in TIPS, you and your portfolio are entering new territory -- just as if you decided that pork bellies needed to be favored. There are sound reasons that Bogleheads select total market index funds.

That being said, nobody is arguing against using bulletproof TIPS -- the kind that are not affected by liquidity or market forces, i.e. I Bonds or constructing a TIPS liability matching portfolio, in contrast to TIPS funds, in contrast to allowing the auction market to set a value for TIPS that can be less than their face value (allowing there to be a negative real yield). In other words, should you invest in TIPS with blinders on, like is advocated for so many other investments around here (TSM, TISM, TBM)? The title of this thread implies that this is a Boglehead mantra, but since the TBM doesn't include TIPS, it needs to be much more explicit as to how an investor should go about adding TIPS to their portfolio -- apart from having to dissect 10+ years of posts to figure it out. Is 50% FIPDX the right answer (total bond market fund for TIPS)? Are only I Bonds appropriate? Long, Intermediate, Short? LMP? There are so many questions on this. Having monitored these posts, I would say there is strong consensus to buy I Bonds. There is strong consensus to construct a TIPS LMP. Other than that, I don't see the agreement other than possibly thinking that an intermediate TIPS fund is about right. (Sorry for the ramble).
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by hudson »

Dude2 wrote: Mon Aug 30, 2021 5:17 am Just some general ideas for consideration. The TIPS market is small. There are only so many born by the government per year. Some people believe there is a liquidity issue with TIPS and this is why there have been several instances in crisis times where their performance has not lived up to theory -- not that in the longer run they didn't bounce back to where they should be. So, part of the reason that 401k plans, life cycle funds, target date funds, etc. do not include TIPS (for the most part) is the scarcity of them in the overall bond universe. Therefore, by deciding to go "out of your way" to invest in TIPS, you and your portfolio are entering new territory -- just as if you decided that pork bellies needed to be favored. There are sound reasons that Bogleheads select total market index funds.

That being said, nobody is arguing against using bulletproof TIPS -- the kind that are not affected by liquidity or market forces, i.e. I Bonds or constructing a TIPS liability matching portfolio, in contrast to TIPS funds, in contrast to allowing the auction market to set a value for TIPS that can be less than their face value (allowing there to be a negative real yield). In other words, should you invest in TIPS with blinders on, like is advocated for so many other investments around here (TSM, TISM, TBM)? The title of this thread implies that this is a Boglehead mantra, but since the TBM doesn't include TIPS, it needs to be much more explicit as to how an investor should go about adding TIPS to their portfolio -- apart from having to dissect 10+ years of posts to figure it out. Is 50% FIPDX the right answer (total bond market fund for TIPS)? Are only I Bonds appropriate? Long, Intermediate, Short? LMP? There are so many questions on this. Having monitored these posts, I would say there is strong consensus to buy I Bonds. There is strong consensus to construct a TIPS LMP. Other than that, I don't see the agreement other than possibly thinking that an intermediate TIPS fund is about right. (Sorry for the ramble).
Thanks Dude2!
I agree...especially with the above bolded texted.
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by BogleBuddy12 »

Giving this thread a bump to see if anyone’s feelings have changed.
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by chrisdds98 »

about half of my bonds are intermediate tips
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by Robot Monster »

BogleBuddy12 wrote: Thu Nov 25, 2021 11:58 am Giving this thread a bump to see if anyone’s feelings have changed.
I found the discussion upthread over the spelling of "Treasuries" vs "Treasurys" pretty riveting, as I'm sure we all did. (As to my current feelings, I'm still on Team Treasuries.)

In all seriousness, I was surprised to see in the initial post that the "An Investor in Late Retirement" allocation almost matches mine: approximately 25% stocks, 50% TIPS (both the fund and individual, including 30yr), 25% cash.

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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by 000 »

BogleBuddy12 wrote: Thu Nov 25, 2021 11:58 am Giving this thread a bump to see if anyone’s feelings have changed.
If only the Bogleheads had stayed the course with 50% in TIPS.
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Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

Post by dbr »

BogleBuddy12 wrote: Thu Nov 25, 2021 11:58 am Giving this thread a bump to see if anyone’s feelings have changed.
The answer in general is that it isn't reasonable to presume that you can obtain bond investment recommendations that are that specific. There are many, many choices in what bonds to hold and few large and consistent differences within and among all the choices. An investor who wants someone to tell them what bonds to hold can get that by looking at a single recommendation somewhere and then being sure not to look at any other recommendations. After all, you can always solve the 31 flavors problem by ordering vanilla every time.

If an investor does want to quantify bond investing one can consider that in general the factors that determine what one has are term and credit risk and go from there.

If an investor assesses that inflation would be a special risk for them, then it would be sensible to hold only TIPS and/or I bonds.

You can probably waste more time and mental energy worrying about what bonds to hold than any other way.
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