Yes, this is why the ladder only goes up to 5 years. The portfolio does change in value, but only very little compare to the rest of her portfolio. I don't know how much a 5 year TIPS dropped in 2022 but the bond market has been pretty volatile for the past couple of years and she hasn't been bothered by small amount of volatiltiy. Part of the reason I was doing the TIPS ladder and not bond fund is that she can redeem a rung without any possibility of a loss. If I use nominal bonds, there would be a possibility of a real loss. If I use TIPS with negative yield, there would be a real loss, too.The issue I see in your case specifically is that if she looks at her account, regardless of TIPS yield she might see losses. The longer term the TIPS, the larger the losses (or gains) might be. They wouldn't be realized until/unless the bonds are sold, but that might not make everyone feel better.The two big requirements is that there should be a low possibility of losing money nominally (so no default), and that it tries to maintain real value. TIPS still seem like a good bet.
The only issue I see is that if we get bonds with negative yields and I buy some I am going to have to explain why I purchase something that cost money nominally and that would not be fun. May be I would have to purchase a CD or a nominal bond . I
I have tried to use Ibonds, but the issue with ibonds is that her rung is just too big for ibond and she had big problems accessing treasury direct that I eventually got rid of ibonds I helped her purchased back in 2020 or so.
Statistics: Posted by gavinsiu — Wed Feb 04, 2026 1:37 pm — Replies 9 — Views 411