How much in TIPS?

[nun]

For those of us close to or actually in retirement, what %age of your portfolio do you have in TIPS?

 

[73ss454]

0

 

[clifp]

When TIPs had real coupons over 3% (2000,2001) I had 20+% of my assets in them, plus bought as many EE bonds as I could. At current rates 0%.

 

[JPatrick]

O%
However, a sizeable chunk of I-Bonds from the golden years. Planning on buying more before the month ends.

 

[FIREd]

I have sold pretty much all my TIPS over the past couple of months. They now represent less than 1.5% on my portfolio. If the stock market takes another dive, I'll sell that last bit and buy stocks with the proceeds.

 

[nun]

Is everyone a market timer? I've rebalanced from TIPs to equities recently, to keep then around 15%.

 

[walkinwood]

My aim is 5% and I use vanguards TIPs fund. My portfolio is 60% equity, 40% fixed income.

 

[M Paquette]

For those of us close to or actually in retirement, what %age of your portfolio do you have in TIPS?

Half of the bond/fixed income portion of my asset allocation, as a broad TIPS fund. This was fortuitously bought in late 2008, so I can say that TIPS have been very good to me.

 

[FIRE'd@51]

Half of the bond/fixed income portion of my asset allocation, as a broad TIPS fund. This was fortuitously bought in late 2008, so I can say that TIPS have been very good to me.

Yes, but the question is, as always, what do you do going forward? Do you cash in those gains and invest elsewhere? Or are you willing to continue to hold on to them and earn a substandard real return (less than 1%) on the current value of those assets?

 

[Alan]

O%
However, a sizeable chunk of I-Bonds from the golden years. Planning on buying more before the month ends.

+1

I-bonds currently at 8.7% of investments.

 

[M Paquette]

Yes, but the question is, as always, what do you do going forward? Do you cash in those gains and invest elsewhere? Or are you willing to continue to hold on to them and earn a substandard real return (less than 1%) on the current value of those assets?

Hold. My investment planning statement says that I keep half of the fixed income funds in TIPS. I know that I'm not capable of knowing what might happen over the next 30 years, but I do know that if I sell right now, I'll realize taxable capital gains as well as put my portfolio out of balance with regard to my investment planning statement.

 

[nun]

Hold. My investment planning statement says that I keep half of the fixed income funds in TIPS. I know that I'm not capable of knowing what might happen over the next 30 years, but I do know that if I sell right now, I'll realize taxable capital gains as well as put my portfolio out of balance with regard to my investment planning statement.

Looks like there are 2 camps here, those with an asset allocation that they rebalance and those that market time.

 

[MichaelB]

We hold no TIPS but our portfolio is all taxable - no tax deferred. If I had a tax deferred option I would put at least 1/4 of our fixed income llocation in TIPS because of their strong diversifying qualities.

On this thread, people that respond zero or close to zero TIPS might comment what they do have in fixed income.

 

[FIREd]

On this thread, people that respond zero or close to zero TIPS might comment what they do have in fixed income.

Mainly CDs and intermediate term bonds with a smidgen of i-bonds. I sold the TIPS to buy stocks because my TIPS were up huge and my stocks were down. I think they call it "rebalancing".

 

[REWahoo]

I sold the TIPS to buy stocks because my TIPS were up huge and my stocks were down. I think they call it "rebalancing".

You're a dirty market rebalancer...

 

[nun]

Mainly CDs and intermediate term bonds with a smidgen of i-bonds. I sold the TIPS to buy stocks because my TIPS were up huge and my stocks were down. I think they call it "rebalancing".

So that implies you rebalanced down to your planned allocation......what is that?

 

[arebelspy]

So that implies you rebalanced down to your planned allocation......what is that?

Apparently very low, as he said earlier in the thread he's at about 1.5% TIPS.

 

[nun]

We hold no TIPS but our portfolio is all taxable - no tax deferred. If I had a tax deferred option I would put at least 1/4 of our fixed income llocation in TIPS because of their strong diversifying qualities.

On this thread, people that respond zero or close to zero TIPS might comment what they do have in fixed income.

I have 60% bond allocation, so my 15% in TIPS is 25% of my bond allocation. It's there incase inflation takes off with all the money being pumped into the economy.

 

[haha]

So that implies you rebalanced down to your planned allocation......what is that?

I suppose that he will answer, but the question interests me also. I look at the allocation more as a market basket. If chicken is cheap, I buy chicken. If beef or pork is on sale this week, I buy beef or pork. Markets are always reacting to various things, some fundamental but many just due to whims and fancies and various technical factors of trading. I want to fade those market actions.

Even at my age, I would be ok with 90-95% equities, if they are cheap enough relative to fixed, ands even more importantly absolutely. When TIPS were offering 3%+, I bought a lot of them, but foolishly sold them for relatively small gains to buy stocks in the early 00s.

Everything today stinks; it is not a good time to be an investor. My Dad who had no pension put almost his entire net worth into the longest treasuries he could get pretty much at the absolute bottom of the treasury market in 1980. His only equities were some Exxon and Cincinnati Bell that he inherited. That took some nerve, but it fixed his very long deluxe retirement. Todays retirees must poke around in the chicken guts, trying to find some scrap to make a meal from.

Ha

 

[brewer12345]

I have 60% bond allocation, so my 15% in TIPS is 25% of my bond allocation. It's there incase inflation takes off with all the money being pumped into the economy.

Call me crazy, but with such low TIPS yields I think you can hedge inflation far more effectively with modest positions in certain types of equities. Commodity producers, hard asset owners, etc. all work. Better yet is that all these things have inherent and/or financial leverage to inflation, so a little position delivers a lot of inflation protection.

 

[Nords]

On this thread, people that respond zero or close to zero TIPS might comment what they do have in fixed income.

Call me crazy, but with such low TIPS yields I think you can hedge inflation far more effectively with modest positions in certain types of equities. Commodity producers, hard asset owners, etc. all work. Better yet is that all these things have inherent and/or financial leverage to inflation, so a little position delivers a lot of inflation protection.

Doesn't sound so crazy to me.

We're holding >~90% of our ER portfolio in equities and the remainder (roughly two years' spending cash) in a five-year CD ladder.

But my military pension is roughly the equivalent of TIPS, so there's no need to pile on more bond assets.

 

[nun]

I think I should have addressed my question to those with lazy portfolios. People who look for bargains and change their allocations outside of some basic allocation will probably be all out of TIPS.

 

[FIREd]

Apparently very low, as he said earlier in the thread he's at about 1.5% TIPS.

I don't have a set allocation for TIPS, nominal treasuries, corporate bonds, high yield bonds, international bonds, or whatever.

I only have a target stock/bond allocation. The type of bonds I hold varies.

In August and September, my overall bond allocation was too high. I rebalanced by selling the bonds that had appreciated most (TIPS). After taxes, the people who bought my TIPS are pretty much guaranteed to get a negative real rate of return on their money over the next few decades. Maybe they don't mind. I think I can do better. YMMV.

 

[veremchuka]

0. I would have an allocation to TIPS as they are a good diversifer, not correlated to other fixed or equities, but they pay zip, zilch, zed, nada. If they were worth holding I'd put possibly up to 1/2 of FI in TIPS but not now.

I agree that you can get inflation protection through equity appreciation but that's over time as the past few years or past dozen years have shown except for short bursts where they did perform dramatically.

 

[W2R]

On this thread, people that respond zero or close to zero TIPS might comment what they do have in fixed income.

I don't have any individual TIPS. My fixed income allocation consists of

(1) VBTLX - - Vanguard Total Bond Market Index Fund
(2) VWIAX - - Vanguard Wellesley Income Fund (currently 62.53% bonds)
(3) TSP G Fund - - Government bond fund
(4) cash (money market and savings)