No, I can't say that absolutely. Different people have different situations, different needs, and different reasons for investing.If I'm understanding you correctly, you're saying you don't see a reason for me (anyone?) to hold the 20% fixed income portion of my risk portfolio in anything other than TIPS. Is that right?
I have not yet heard what I consider a good argument for investing in any other fixed income products instead of TIPS at today's yields, other than perhaps the inability or lack of desire to hold to maturity. I-Bonds are no longer yielding enough to, in my humble opinion, be competitive. I am holding $20K in I-Bonds that I bought in 2023 at 1.3% when TIPS were yielding 1.6-1.7%. I sold all my olderI-Bonds to buy TIPS in 2022-3.
For me, the purpose of fixed income is to mitigate the risk of one's portfolio, and TIPS at current yields seems to have the best risk/reward ratio of any alternatives I have found if held to maturity. By investing all the money that I can't afford to lose in TIPS I can sleep easier at night, even if the stock market falls by 99%. Whether my TIPS outperforms nominals or not in the long run is a crapshoot...I have no crystal ball and it is not particularly important to me. I know with as much certainty as one can have with investing that they will provide me with more spending power down the road than I have now, whereas anything could happen with nominals or CDs, especially if there is unexpected inflation.
Statistics: Posted by protagonist — Wed Jan 08, 2025 5:04 pm — Replies 18 — Views 2262