I view this the same way Target Date funds view it.
Vanguard includes TIPS in their 2025 fund but none of the longer dated funds.
This to me is reflecting the idea that when younger you get some form of inflation protection from equities (at least against moderate inflation). But as you age, if you reduce equities in your AA and go to all nominal bonds, you lose your ability to keep pace with the usual level of inflation.
So it's not that TIPS change my AA, it's that I added TIPS BECAUSE OF my AA.
I planned many years ago before recent inflation uptick, to replace SOME of my equity AA with TIPS gradually, just as the Target Date funds do.
I think the question you pose is really more one of "if I use liability matching and covered my expenses should I modify my AA and/or should I include the LMP in my portfolio for setting AA" ? I don't use the concept of LMP with individual bonds. I am just trying to live within our means for interest, dividends and my spouse still working part time. When she stops working will use something like the 4% rule. I simply don't want to try to guess the timing and amount of my expenses for the next 2 decades.
Vanguard includes TIPS in their 2025 fund but none of the longer dated funds.
This to me is reflecting the idea that when younger you get some form of inflation protection from equities (at least against moderate inflation). But as you age, if you reduce equities in your AA and go to all nominal bonds, you lose your ability to keep pace with the usual level of inflation.
So it's not that TIPS change my AA, it's that I added TIPS BECAUSE OF my AA.
I planned many years ago before recent inflation uptick, to replace SOME of my equity AA with TIPS gradually, just as the Target Date funds do.
I think the question you pose is really more one of "if I use liability matching and covered my expenses should I modify my AA and/or should I include the LMP in my portfolio for setting AA" ? I don't use the concept of LMP with individual bonds. I am just trying to live within our means for interest, dividends and my spouse still working part time. When she stops working will use something like the 4% rule. I simply don't want to try to guess the timing and amount of my expenses for the next 2 decades.
Statistics: Posted by beyou — Sat Nov 30, 2024 8:45 am — Replies 15 — Views 1407