TIPS etf

[freedom2022]

For diversification and preservation of capital, TIPS is a good investment.
I look into STIP and VTIP, etf for TIPS. Yield is over 3%.
However. the price dropped in recent months, although the inflation data show the rate is climbing up.
I understand the dropped yesterday was due to the ex date on dividend.

Any thought?

 

[Markola]

I don’t own any but I know Vanguard puts a component in their target date funds, and Vanguard is pretty smart. They do diversify and preserve capital but they come with more volatility than other bonds, which isn’t something one is normally looking for on the fixed income side.

 

[Chuckanut]

I don’t own any but I know Vanguard puts a component in their target date funds, and Vanguard is pretty smart. They do diversify and preserve capital but they come with more volatility than other bonds, which isn’t something one is normally looking for on the fixed income side.

 

[Mulligan]

For diversification and preservation of capital, TIPS is a good investment.

I look into STIP and VTIP, etf for TIPS. Yield is over 3%.

However. the price dropped in recent months, although the inflation data show the rate is climbing up.

I understand the dropped yesterday was due to the ex date on dividend.



Any thought?

Presently IBonds smoke TIPS. Granted one cant contribute much on annual basis. But a couple could invest 20k now and $20k in January, plus 5k via refund from tax refund.
One can basically lock in 5% for a year if they invest before end of month. The Jan. deposit would be over 3% for 6 months, plus whatever CPI is for Nov through April for following 6 month cycle.

 

[kevink]

FWIW Vanguard uses its short-term TIPS fund (VTAPX/VTIP) in its Target Retirement Income Fund. That fund has only existed for 8 years and its returns have been nothing to write home about. Theoretically short term TIPS provide some protection against sudden and/or short-term inflation.

Mulligan is right though. iBonds smoke not only TIPS of any duration but every other Treasury bond and cash option so maxing those out first is a no-brainer. That said I can't see anything wrong with a modest allocation to VTIP.