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Originally Posted by SecondCor521
apparently they (by they I mean the regular 30 year Treasury bond) pay interest every six months. A quick calculation says 4.9% of $250,000 is $12,250, so each six months would be about half that. If you wanted the inflation protection you would start out taking the ~$11k and leave the rest to compound. That doesn't work exactly, obviously, but it's close enough for the purposes of this analysis I think.
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That means you are taking out 90% of the interest per year. But you would need to leave about 3% of the interest to accumulate if the bond was to generate an additional 3% each year -- wouldn't you? If you take out essentially all of the interest, the bond principal never grows enough to generate interest sufficient to beat inflation. You can't dip into the principal so where does the cash flow come from? Am I mising something?
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