Guessing the rung size based on personal needs is always better than taking on some random rung size determined by the ETF. Another reason why I feel ETF is not the best way to handle TIPs need.Why? If yields go higher, the NAV of your LTPZ will decline. If the fund duration matches the duration of your proposed ladder, there is nothing to be gained by waiting and 0.2%/year to be saved. As I see it, you might as well sell your ETF and buy individual TIPS of matching duration now. IIRC, you have all you want in TIPS for now, so higher rates help only if you allocate more funds to TIPS.
Here's hoping yields climb further.
One possible obstacle is uncertainty on rung size. If this is the case, you could go ahead with a guess at the minimum size rung, with potential to top up later.
After using a TIPs ladder calculator, one might find that they cannot afford the ladder with the rung sizes they want, in that case, not having enough saved up cannot be solved by using a TIPs ETF instead of a ladder.
Statistics: Posted by silvergga — Tue Jun 04, 2024 1:04 am — Replies 3498 — Views 856171