That there are or will be better yields someplace else will always be true so I think of tips not as wealth creating but wealth preserving. So when I decide I want to have $10000 a year for the next 10 years I buy a tips ladder maturing every year for 10 years that pays out 10k now the good part is if inflation runs up my tips rise and if it takes 12000 to equal 10000 the tips rise with inflation so I have the same spending power no matter what happens. Meanwhile a SPIA would have declined in true value since it would just keep paying that same 10k each year even though inflation had gone up. I just bought a small Tips ladder to just go through the process and it’s really very easy through Fidelity and I’m sure at other brokerages.Same here. I still don't fully understand them.
It seems like when buying TIPS you're giving up good (or at least better) yields in exchange for inflation protection. But what if inflation is not that much down the road? I mean it has been so high in the recent years that perhaps it will now be low for many years?
Statistics: Posted by FellsGuy — Sat Sep 28, 2024 8:28 pm — Replies 101 — Views 10594