I choked

lawman said:
What a cool chart!
BLANDX did not exist prior to Dec. 2019 but they have done well ever since..
Click to expand...


Oops! Didn't pay attention to my own chart. I notice now the chart starts Jan 2020. Still it has done better than other alternatives generally recommended. Of course, past results are no guarantee of future performance.
 
jazz4cash said:
So do I, but this is a good place to learn. I do know that TIPS adjust for inflation by increasing your principal. Your large ibond account should help you SWAN (sleep well at night). I only just started buying ibonds and I suspect we’ve missed out on the best time for TIPS but it’s never too late.
Click to expand...

The best time to buy TIPS is when people are worried about recessions and deflation and not inflation, which might be coming up. After 2008, some of the yields hit 2 - 3%. TIPS at a 0% real return (which is what I bonds are currently selling for) over 30 years have a safe withdrawal rate of 3.33% (100 / 30 years = 3.33%). 1.3% real yield = 4% SWR, 3% = 5% SWR). This is for individual bonds, not funds or ETFs. Those do not mature like individual bonds. We have a ladder and usually buy at auction. They are best in retirement accounts as unlike I bonds, the inflation adjustments are taxable income. You can find the current yields here - https://www.bloomberg.com/markets/rates-bonds/government-bonds/us. All but the 5 years have real yields above 0% now, and those yields should go up more this year as the Fed continues to raise interest rates.

Social Security, pensions and a TIPS ladder cover all the money we need for our retirement expenses. At our ages stocks may or may not recover in our lifetimes. The Triumph of the Optimists book says stocks always do better than bonds in the long run, but based on a multi-country analysis that long run may be 40 years. I buy stocks with the money I can afford to gamble with and only as much as wouldn't hurt too much to lose half. The latest Morningstar projections are for a 50/50 stock and bond portfolio SWR to be 3.33 SWR, with a lot more volatility and no government backed guarantees. Wade Pfau's projections are even lower at 2.4% - https://www.thinkadvisor.com/2020/04/14/wade-pfau-virus-crisis-has-slashed-4-rule-nearly-in-half/

Check out The Bond Book for more info on TIPS. If mutual fund and insurance companies could make a profit off TIPS, they would be touting them as the greatest thing since cornflakes. But they can't, so they try to pretend like they don't exist. TIPS fit into an asset matching strategy for retirement funding - https://www.bogleheads.org/wiki/Matching_strategy ( For the money you ‘must’ have, use matching strategies and for the money you would ‘like’ to have, use diversification and risky assets.) Bobcat2's posts on Bogleheads cover all of this.
 
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How old is "old", if you wish to say?
 
lawman said:
I wish I knew more about TIPS..My inflation protection is primarily my large I Bond account..I would be interested in TIPS funds if I knew exactly when and how they make and lose money..
Click to expand...
Well, start with studying TIPS. There's plenty of material on the 'net. They are pretty simple and you can buy them through your broker. Nothing unusually difficult or unusual about it.

The only caution I'd offer, though, is to go big or go home. Putting a small percentage of a portfolio in TIPS provides essentially no useful inflation protection.

Re TIPS funds, I am not much help. Generally, I think buying any fund that strictly holds govvies is a bad idea. One of the main reason for a bond fund is to diversify risk, but there is no practical risk in govvies. (anything backed by "full faith and credit" of the US)
 
CuriousJoe said:
Pardon my ignorance. I thought 10k limit is for each tax ID. Say, I login as myself, and buy 10k under my SS and 10k under my wife's SS as a gift to her.



Can my wife login as herself and buy 10k under her SS and 10k under my SS as a gift to me?
Click to expand...



There’s a whole long thread here on ibonds. Within this thread there are several descriptions of a gifting strategy that enables you to pre-buy the annual limit of ibonds as a gift. You could, for example buy 30k of gift bonds to be awarded to a spouse over the next 3 years and a spouse could do the same for you. The bonds earn interest at the prevailing rates while they are in the “gift box”. Very wonky but pretty slick too!

The I Bond Thread
https://www.early-retirement.org/forums/showthread.php?t=113668
 
daylatedollarshort said:
The best time to buy TIPS is when people are worried about recessions and deflation and not inflation, which might be coming up. After 2008, some of the yields hit 2 - 3%. TIPS at a 0% real return (which is what I bonds are currently selling for) over 30 years have a safe withdrawal rate of 3.33% (100 / 30 years = 3.33%). 1.3% real yield = 4% SWR, 3% = 5% SWR). This is for individual bonds, not funds or ETFs. Those do not mature like individual bonds. We have a ladder and usually buy at auction. They are best in retirement accounts as unlike I bonds, the inflation adjustments are taxable income. You can find the current yields here - https://www.bloomberg.com/markets/rates-bonds/government-bonds/us. All but the 5 years have real yields above 0% now, and those yields should go up more this year as the Fed continues to raise interest rates.

Social Security, pensions and a TIPS ladder cover all the money we need for our retirement expenses. At our ages stocks may or may not recover in our lifetimes. The Triumph of the Optimists book says stocks always do better than bonds in the long run, but based on a multi-country analysis that long run may be 40 years. I buy stocks with the money I can afford to gamble with and only as much as wouldn't hurt too much to lose half. The latest Morningstar projections are for a 50/50 stock and bond portfolio SWR to be 3.33 SWR, with a lot more volatility and no government backed guarantees. Wade Pfau's projections are even lower at 2.4% - https://www.thinkadvisor.com/2020/04/14/wade-pfau-virus-crisis-has-slashed-4-rule-nearly-in-half/

Check out The Bond Book for more info on TIPS. If mutual fund and insurance companies could make a profit off TIPS, they would be touting them as the greatest thing since cornflakes. But they can't, so they try to pretend like they don't exist. TIPS fit into an asset matching strategy for retirement funding - https://www.bogleheads.org/wiki/Matching_strategy ( For the money you ‘must’ have, use matching strategies and for the money you would ‘like’ to have, use diversification and risky assets.) Bobcat2's posts on Bogleheads cover all of this.
Click to expand...
What are the 1 month and 1 year shaded numbers on the rates chart?
 
I will say I think the thread name is apt.

The most important rule in investing, in my opinion, is:

Stay

Fully

Invested
 
CuriousJoe said:
Pardon my ignorance. I thought 10k limit is for each tax ID. Say, I login as myself, and buy 10k under my SS and 10k under my wife's SS as a gift to her.

Can my wife login as herself and buy 10k under her SS and 10k under my SS as a gift to me?
Click to expand...

Yes exactly.

And if you had a free trust or self employment, you can set up an entity account and even if it uses the same SSN and bank account it's treated as separate, but limited to the $10K per year purchase only.
 
Not sure if this chart is relevant to this discussion but I've always liked this. Yes it's 12 years old but still valid I think.

risk-vs-return.jpg
 
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marko said:
Not sure if this chart is relevant this discussion but I've always liked this. Yes it's 12 years old but still valid I think ...
Click to expand...
Yes! That's the Markowitz/Modern Portfolio Theory/Efficient Frontier graph and, although the numbers will vary slightly depending on current forecast returns and variances, I think it does a good job of illustrating why equities are important. Markowitz got a Nobel for this.
 
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OldShooter said:
Yes! That's the Markowitz/Modern Portfolio Theory/Efficient Frontier graph and, although the numbers will vary slightly depending on current forecast returns and variances, I think it does a good job of illustrating why equities are important. Markowitz got a Nobel for this.
Click to expand...

I like it because it shows that bonds carry the same amount of risk than a 60/40 with much lower returns.
 
marko said:
I like it because it shows that bonds carry the same amount of risk than a 60/40 with much lower returns.
Click to expand...

And 28% in equities produces almost as much return as 60% in equities.
 
lawman said:
I can't see me ever buying more equities on any significant scale.
Click to expand...

I can. Based on your recent posts, you seem like a person who sells low (now), and will stay out of the market for a while (several years?) then buy back in high when you feel like stocks are safe again and you're tired of missing out.

I say this not to be mean, but to encourage you to pick an AA that works for you and stick with it through thick and thin, which I think will give you better returns over time.

My 2 cents, YMMV, IANAL, etc.
 
SecondCor521 said:
I can. Based on your recent posts, you seem like a person who sells low (now), and will stay out of the market for a while (several years?) then buy back in high when you feel like stocks are safe again and you're tired of missing out.

I say this not to be mean, but to encourage you to pick an AA that works for you and stick with it through thick and thin, which I think will give you better returns over time.

My 2 cents, YMMV, IANAL, etc.
Click to expand...

I’ll piggyback on your post. The OP in the bond threads has facilitated back and forth on so many options. I stopped making suggestions.

Pick an allocation and live it.
 
Sunset said:
Same here.
Only bought them in the past 2 years.
Never knew what they were, or where to buy them.
Click to expand...

When I bought, you could get them at a bank instead of using the Treasury web site. I ran short of cash or probably would have bought more over the years. Trying to "get rid" of qualified money - Roth conversions with cash paying the taxes took most cash. YMMV
 
COcheesehead said:
Pick an allocation and live it.
Click to expand...

Not my style..Market conditions change over time and so should I..Doing nothing is too easy and that has cost me way more than taking action and making moves..For example I knew a year ago I should have moved out of my investment grade bond fund..Having served me well for 15 years it was easy to do nothing...BIG MISTAKE
 
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