Gyroscopic Investing

a 60/40 has ended 30 years with more then one started with 90% of all 123 rolling 30 year cycles to date .

67% of the time it ended with 2x what you started with , and 50% of the time 3x what you ended with .

this is at a 4% inflation adjusted draw

mathjak107 wrote: ↑Sat Aug 12, 2023 3:07 pm
a 60/40 has ended 30 years with more then one started with 90% of all 123 rolling 30 year cycles to date .

67% of the time it ended with 2x what you started with , and 50% of the time 3x what you ended with .

this is at a 4% inflation adjusted draw

You willing to bet you'd not be in that 10%? That probability is only slightly less than Russian Roulette. If I gave you two guns - one with no bullets in it and the other with one bullet in it - and you pick on gun to pull the trigger .... that would put it slightly less than 10%.

If you win you get your 4$ inflation adjusted draw. If you lose ... you are still living but with no money.

Do you choose one gun and pull the trigger?

Also, don't we really only have a shade over 3 totally independent 30 year cycles? 3 is a tiny, tiny, tiny, tiny sample.

To each their own, but I would rather step on a lego than hold 60/40 with my money.

I only hold 25% equity via the ATP, and I'm only 34 years old.

yankees60 wrote: ↑Sat Aug 12, 2023 8:32 pm

mathjak107 wrote: ↑Sat Aug 12, 2023 3:07 pm a 60/40 has ended 30 years with more then one started with 90% of all 123 rolling 30 year cycles to date .

67% of the time it ended with 2x what you started with , and 50% of the time 3x what you ended with .

this is at a 4% inflation adjusted draw

You willing to bet you'd not be in that 10%? That probability is only slightly less than Russian Roulette. If I gave you two guns - one with no bullets in it and the other with one bullet in it - and you pick on gun to pull the trigger .... that would put it slightly less than 10%.

If you lose ... you are still living but with no money.

Do you choose one gun and pull the trigger?

Also, don't we really only have a shade over 3 totally independent 30 year cycles? 3 is a tiny, tiny, tiny, tiny sample.

90% odds , i sure would bet on that ..in fact i already cleared what is called the red zone of retirement headed into 9 years .

we are considerably higher then the day we retired so we are upping our draw as 4% is to low at this stage

that 10% chance actually is reduced to just about zero once life expectancy stats are combined since very few will last 30 years in retirement .

also stats run both ways , that 10% chance of failure is the same 10% odds of ending with 5x what you started with


it is also not a win or lose situation…you need at least a 2% real return over the first 15 years of a 30 year retirement for 4% inflation adjusted to hold .

if 7-8 years in you are not seeing that then cut back a bit ..even the failures took just a quarter point reduction or so to last

so much ado about nothing in practice

yankees60 wrote: ↑Sat Aug 12, 2023 8:32 pmAlso, don't we really only have a shade over 3 totally independent 30 year cycles? 3 is a tiny, tiny, tiny, tiny sample.

In more extreme cases I extend mine out to around 11. US (from 1871), UK (from 1896), Japan (since 1972). Spans a broader range of events such as decline of the Pound as the predominant international trade settlement currency etc. But does exclude total collapse (Japan and WW2 for instance). Broadly the US was a right tail/good-great case, UK was more middle road (more reflective of global middle/average).

With heirs I also focus more on PWR, looking to leave a legacy of around the inflation adjusted start date value. 3.33% 30 year SWR return of inflation adjusted money via yearly instalments, ending with wealth preserved.

Better in that respect for me is a Talmud thirds each land (homes), stocks, gold asset allocation. Where imputed rent is also considered as part of that, historically 4% so 1.33% proportioned, leaving 2% of total wealth as disposable income. I also set 'inflation' to be 50/50 CPI and average of house/stock/gold price only. Historically house/stock/gold price only inflation was > just CPI inflation alone. i.e. anticipate 2x total return, 1x via SWR/spending (so CPI inflation rate), 1x left at end (that might be 'spend' on buying equal amounts of land, stock, gold).

In regards to rebalancing, diversify across both rebalanced and non-rebalanced. Home(s) value left non-rebalanced (illiquid). For currency diversification, UK home, US stock, global gold.

Improvements in technology/efficiencies have enabled CPI to relatively lag other assets inflation rates. Fields full of manual workers replaced by a single individual and a big machine that can do the same work in a fraction of the time. Perhaps such efficiencies are near peaked, so in future perhaps CPI and other assets price inflation rates might be more inclined to align. Or maybe not.

A nice feature is that portfolio total return growth versus price only inflation rates tend to more align, portfolio volatility is reduced - that is inclined to yield a better result than if variance was higher. Also reducing SWR even a little can make a big difference to outcome. Having part of SWR as liability matched imputed rent and the volatility in rental yields is irrelevant when you are in effect both landlord and tenant.

The negative side is that of potential regret of looking back and seeing how much more one might have had, had they only been more aggressive in their asset allocation. Maybe 3x or more wealth when having ended with 'just' 1x. But equally to target that 3x type objective involves taking on more risk, so one risks outcome for self in favor of potential benefit for heirs, who may just blow it all anyway. Better IMO to target a modest/reasonable legacy and having lower risk to oneself instead of higher risk to oneself.

Should stocks become no longer viable/possible, they'd be replaced with art. Thirds each land, art, gold ... old-style asset allocation. Each might broadly offset inflation, but in a volatile manner. With diversification across all three the tendency is towards closer alignment with inflation, as one lags so another might lead, combined smoother average. With stocks you have both price appreciation and dividends, as with a house you have price appreciation and dividends. If stocks were swapped out for art you give up the dividend benefit (as do you when holding gold). Broadly imputed rent and dividends tend to compare (as do house and stock prices). So land/stock/gold when you assume imputed = dividends is somewhat 67/33 stock/bond like, a third less 'dividends' than all-stock. The improved (reduction) in volatility however narrows down that gap, less variance, better compounding.

Which fundamentally is my PP is just the stock/gold elements. No bonds, land instead. Or could be considered to be 67/33 equities/gold. With a 3% SWR applied to that stock/gold liquid assets value. Given the lower stock weighting I prefer small cap value instead of TSM. As yet further testing you can use the likes of Monte-Carlo simulations of data, which might be considered as adding a 12th non-overlap data set

seajay wrote: ↑Sat Aug 12, 2023 2:22 pm Don't forget that with a 4% 30 year SWR TIPS ladder that assumes all is spent, no residual. For other asset allocations 4% 30 year SWR was around the worst case outcome, left nothing remaining ... but in the more usual/average case tended to leave a very decent residual amount remaining, in some cases multiples more of the inflation adjusted start date portfolio value.

This is an excellent point and one that seems to get glossed over with all the current excitement (well, maybe not on this board) about TIPS rates being strongly positive again.

seajay wrote: ↑Sat Aug 12, 2023 2:22 pm TIPS ladders are perhaps better suited for relatively short periods. If you're near 60 and will receive a 20K/year inflation adjusted occupational pension in 5 years time, then you might in-fill that difference with a TIPS ladder rather than using stocks, where 5 years is a relatively short period - too volatile/risky. So at a assumed 0% TIPS real yield right across 1 to 5 year TIPS bonds loading 5 years of 20K into a 5 year TIPS ladder in effect has you sitting on a regular 20K/year inflation adjusted income from age 60 onward, first 5 years covered by TIPS, until the occupational pension kicks in.

I'm sure this is confirmation bias on my part, but this is essentially what I am doing with my five-year TIPS ladder. Just building in a bit of inflation protection in my tax-deferred account before SS starts for me at age 70. The dollar amounts of each rung approximate what I will either be Roth converting or just withdrawing annually.

Again, I am not betting on a particular horse as I hold roughly equal amounts of TIPS and nominals in that account.

yankees60 wrote: ↑Sat Aug 12, 2023 8:32 pm

mathjak107 wrote: ↑Sat Aug 12, 2023 3:07 pm a 60/40 has ended 30 years with more then one started with 90% of all 123 rolling 30 year cycles to date .

67% of the time it ended with 2x what you started with , and 50% of the time 3x what you ended with .

this is at a 4% inflation adjusted draw

You willing to bet you'd not be in that 10%? That probability is only slightly less than Russian Roulette. If I gave you two guns - one with no bullets in it and the other with one bullet in it - and you pick on gun to pull the trigger .... that would put it slightly less than 10%.

If you win you get your 4$ inflation adjusted draw. If you lose ... you are still living but with no money.

Do you choose one gun and pull the trigger?

Also, don't we really only have a shade over 3 totally independent 30 year cycles? 3 is a tiny, tiny, tiny, tiny sample.

firecalc is based on 123 rolling 30 year cycles since 1871.

mathjak107 wrote: ↑Mon Aug 14, 2023 1:58 pm

yankees60 wrote: ↑Sat Aug 12, 2023 8:32 pm

mathjak107 wrote: ↑Sat Aug 12, 2023 3:07 pm
a 60/40 has ended 30 years with more then one started with 90% of all 123 rolling 30 year cycles to date .

67% of the time it ended with 2x what you started with , and 50% of the time 3x what you ended with .

this is at a 4% inflation adjusted draw

You willing to bet you'd not be in that 10%? That probability is only slightly less than Russian Roulette. If I gave you two guns - one with no bullets in it and the other with one bullet in it - and you pick on gun to pull the trigger .... that would put it slightly less than 10%.

If you win you get your 4$ inflation adjusted draw. If you lose ... you are still living but with no money.

Do you choose one gun and pull the trigger?

Also, don't we really only have a shade over 3 totally independent 30 year cycles? 3 is a tiny, tiny, tiny, tiny sample.

firecalc is based on 123 rolling 30 year cycles since 1871.

Yes. Adjacent rolling cycles only have one different year in the 30 year cycle so 97% identical. From 1871 to last year is 151 years. Therefore, room for only 5 FULLY Independent 30 year cycles wherein each year is in only one of five cycles as opposed to a year being repeated in 30 successive cycles. Too much dependency there.

independent cycles are pretty irrelevant. they are as close to showing not much difference as monte carlo
testing does .

monte carlo testing can find a slight worse case outcome sometimes but not much more

the fact is every time frame is based on what happened in the time frame before it .


historical in order testing of each period shows a lot more of how things tend to flow in real life.

that is because periods of time tend to migrate back to the mean .

so skipping large time frames is not the best way to look at things.

this is why simply moving one year forward or one year back ends up with totally different outcomes .

move one year from all the failure periods and nothing failed

1907 , 1929 , 1937 , 1965 , 1966 are the dates a safe withdrawal rate are based on .

in fact safe max didn’t include the 196=1966 period since bengans work didn’t complete the 30 year cycle yet that included it .

that is where the trinity study stepped in , it included 1965/1966 which failed but was not part of bengans work

in

yankees60 wrote: ↑Mon Aug 14, 2023 2:46 pm

mathjak107 wrote: ↑Mon Aug 14, 2023 1:58 pm

yankees60 wrote: ↑Sat Aug 12, 2023 8:32 pm

mathjak107 wrote: ↑Sat Aug 12, 2023 3:07 pm a 60/40 has ended 30 years with more then one started with 90% of all 123 rolling 30 year cycles to date .

67% of the time it ended with 2x what you started with , and 50% of the time 3x what you ended with .

this is at a 4% inflation adjusted draw

You willing to bet you'd not be in that 10%? That probability is only slightly less than Russian Roulette. If I gave you two guns - one with no bullets in it and the other with one bullet in it - and you pick on gun to pull the trigger .... that would put it slightly less than 10%.

If you win you get your 4$ inflation adjusted draw. If you lose ... you are still living but with no money.

Do you choose one gun and pull the trigger?

Also, don't we really only have a shade over 3 totally independent 30 year cycles? 3 is a tiny, tiny, tiny, tiny sample.

firecalc is based on 123 rolling 30 year cycles since 1871.

Yes. Adjacent rolling cycles only have one different year in the 30 year cycle so 97% identical. From 1871 to last year is 151 years. Therefore, room for only 5 FULLY Independent 30 year cycles wherein each year is in only one of five cycles as opposed to a year being repeated in 30 successive cycles. Too much dependency there.

I agree with you that the cycles are 97% identical in terms of the exact years in each cycle (assuming one is comparing two cycles one which started one year before/after the other) but I would also like to point out two caveats.

1. 97% identical by year doesn't even begin to mean 97% identical by returns (i.e. by CAGR). This is especially notable when sequences that are just a few years apart from each other (whether that be by start or by end years) have one sequence of returns that begins on a bad series of years vs one that starts a few years earlier or later (i.e. the one that started in 1929 or 1930 vs the one that started in, say, 1928 or 1932) and thus has a "cushion" that the former does not have. Even one or two bad years at the beginning (or even at the end....although in such a case it is more relevant to raw CAGR calculation than to SWR because a bad year in year 29 or 309 doesn't do much to hurt the SWR vs one in the first few years of retirement) can reduce the CAGR quote a bit; for example (using US stocks as the asset class):

1927-1956 - 10.07% CAGR

vs

1929-1958 - 8.46% CAGR

Or see what happened with the 30-year sequence that ended in 2008 vs the one that started a year earlier and thus ended in 2007....the former had a CAGR of 13.01% vs the latter's CAGR of 11.04%

Needless to say, a difference or roughly 1.5% or 2.0% in CAGR for an asset that returns a nominal 10% CAGR over the long term is a lot larger difference than 3%....more like 15 or 20%.

2. Differences in SWR are likely to be even more dramatic than simple CAGR differences since sequence also plays a role here (again, a few bad years at the start of a sequence will have an even more telling effect here than it did in pure raw CAGR terms). The person who retired on 1-1-1928 had quite a worrying experience for a few years there but ended up just fine; the one who retired on 1-1-1929 (or heaven forbid Aug or Sept of 1929) almost ended up eating cat food. This shows that even a sequence that is just a year (or two or three) apart is actually quite independent in terms of SWR vs in terms of "it's 97% the same because only one year is different".

Incidentally, as per what I mentioned above about August or September 1929 we actually have some 1476 cycles, not 123 (each month starts a new cycle....1-1-1871 to 12-31-1900, then 2-1-1871 to 1-31-1900, etc; 123 X 12 = 1476)...as a point of accuracy, if you want to get detailed and technical we theoretically have roughly 32,500 cycles (since there is daily S&P data back to the mid-1880s) so as such we have almost 22 times more data (since there are 22 trading days in a month on average) than even those 1476 cycles would suggest.

Now, having said all of the above I would also like to point out that the Shiller bond data before 1953 (and really before the 1970s or 80s) is actually quite problematic and is cobbled together from several wildly differing sources none of which was actual Treasury bonds until 1920 or 1921 (oh, and Shiller never actually observed a bond price or coupon payment until very late in his data series IIRC; anything before that is concocted out of yields using mathematical formulae). I can elaborate quite a bit on this should you wish but suffice it to say that I wouldn't be 100% sure the "bond" portion of any stock/bond portfolio SWR calc was particularly accurate before, say the early or mid-1920s (and even from then until the 1940s there were issues). As such the returns may be overstated or understated to a degree.

kitces did a nice article on how the year you were born effects your outcome

https://www.kitces.com/blog/birth-year- ... l-returns/

yankees60 wrote: ↑Wed Aug 09, 2023 11:15 am

Kevin K. wrote: ↑Wed Aug 09, 2023 10:50 am While TIPS bonds aren't often discussed here they've certainly been a hot topic of late on mainstream forums like Bogleheads and sites such as Morningstar - in part because for the first time in many years it's possible to construct a ladder of them yielding a 4%+ inflation-adjusted safe withdrawal rate (SWR). Allan Roth's article in particular has received an enormous amount of interest:

https://www.advisorperspectives.com/art ... lot-easier

I'm wondering if anyone on this forum has considered (or implemented) something like what Roth describes. Historically the PP and (especially) the GB have offered significantly higher SWR's than TIPS but of course such backtesting includes a 40 year tailwind in bonds that's unlikely to be repeated anytime soon.

I am STRONGLY considering something like this!

Just curious if you are really considering a full 30-year ladder of TIPS or something quite a bit shorter than that. You are in your mid seventies now, correct? Just keep in mind that TIPS do go down in value when interest rates rise. As I've stated elsewhere, mine are maturing between 1/15/24 and 1/15/28. The one maturing 1/15/24 is the only one that's in the green with the longer-dated issues more strongly negative (as one would expect due to rising rates & interest rate sensitivity).

I would also think that with a long ladder, what you do with the interest payments matters. Not sure there has been as much discussion on interest payment as there maybe should be (at least on the Bogleheads threads). For example, if you were to purchase a 1/15/26 rung, you would have the choice of a bond with a 2.000% coupon versus another one with a coupon that is only 0.625%. I didn't really have a strategy in mind for the interest payments when I set up my five-year ladder and just re-invested my 7/15/23 interest payments in nominal Treasuries. Depending on how long your ladder is, how much total money you have invested in it, and which coupons you choose, those interest payments can really add up.

mathjak107 wrote: ↑Mon Aug 14, 2023 4:21 pm kitces did a nice article on how the year you were born effects your outcome

https://www.kitces.com/blog/birth-year- ... l-returns/

Thanks for this.

barrett wrote: ↑Tue Aug 15, 2023 6:53 am

Just curious if you are really considering a full 30-year ladder of TIPS or something quite a bit shorter than that. You are in your mid seventies now, correct? Just keep in mind that TIPS do go down in value when interest rates rise. As I've stated elsewhere, mine are maturing between 1/15/24 and 1/15/28. The one maturing 1/15/24 is the only one that's in the green with the longer-dated issues more strongly negative (as one would expect due to rising rates & interest rate sensitivity).

I would also think that with a long ladder, what you do with the interest payments matters. Not sure there has been as much discussion on interest payment as there maybe should be (at least on the Bogleheads threads). For example, if you were to purchase a 1/15/26 rung, you would have the choice of a bond with a 2.000% coupon versus another one with a coupon that is only 0.625%. I didn't really have a strategy in mind for the interest payments when I set up my five-year ladder and just re-invested my 7/15/23 interest payments in nominal Treasuries. Depending on how long your ladder is, how much total money you have invested in it, and which coupons you choose, those interest payments can really add up.

I am 72.

For planning purposes I am using 105!!!

Super conversative that I'd rather have money left over than run out while I am still here.

Also due to my current frugal life style it could be possible for me to live on my Social Security alone.

Currently half my investment money is at risk while the other half is in the Vanguard Treasury Money Market (VUSXX). It is this half that I'm thinking of converting all (or most all -- the rest would go to nominal Treasuries) to TIPS. It is currently where it is not for short-term purposes but for safety, risk purposes.

Therefore trying to forecast which TIPS of which terms to buy to lock in their present good rates (inflation protected).

I'd not anticipate needing to access any of these Treasury investments prior their maturity dates. I'd be willing to take the risks that I might have to do so. But it'd be quite low considering the other half of my investments (non Treasuries) would still be available for withdrawals.

What I'd to with the interest? The TIPS book I read recommended putting it into either TIPS mutual funds or ETFS, neither of which I'd purchase for my main TIPS investment since we know that they could actually lose money like they did in 2022.

If I did do that I'd probably pick the one that had the shortest term investments. Or, put them in VUSXX. Not thought through that part of it yet.

barrett wrote: ↑Tue Aug 15, 2023 6:53 am

yankees60 wrote: ↑Wed Aug 09, 2023 11:15 am

Kevin K. wrote: ↑Wed Aug 09, 2023 10:50 am While TIPS bonds aren't often discussed here they've certainly been a hot topic of late on mainstream forums like Bogleheads and sites such as Morningstar - in part because for the first time in many years it's possible to construct a ladder of them yielding a 4%+ inflation-adjusted safe withdrawal rate (SWR). Allan Roth's article in particular has received an enormous amount of interest:

https://www.advisorperspectives.com/art ... lot-easier

I'm wondering if anyone on this forum has considered (or implemented) something like what Roth describes. Historically the PP and (especially) the GB have offered significantly higher SWR's than TIPS but of course such backtesting includes a 40 year tailwind in bonds that's unlikely to be repeated anytime soon.

I am STRONGLY considering something like this!

Just curious if you are really considering a full 30-year ladder of TIPS or something quite a bit shorter than that. You are in your mid seventies now, correct? Just keep in mind that TIPS do go down in value when interest rates rise. As I've stated elsewhere, mine are maturing between 1/15/24 and 1/15/28. The one maturing 1/15/24 is the only one that's in the green with the longer-dated issues more strongly negative (as one would expect due to rising rates & interest rate sensitivity).

I would also think that with a long ladder, what you do with the interest payments matters. Not sure there has been as much discussion on interest payment as there maybe should be (at least on the Bogleheads threads). For example, if you were to purchase a 1/15/26 rung, you would have the choice of a bond with a 2.000% coupon versus another one with a coupon that is only 0.625%. I didn't really have a strategy in mind for the interest payments when I set up my five-year ladder and just re-invested my 7/15/23 interest payments in nominal Treasuries. Depending on how long your ladder is, how much total money you have invested in it, and which coupons you choose, those interest payments can really add up.

Recent 30 year ladder, $10K/year inflation adjusted (approx), costs $226.5K to buy into. The income and maturing bonds are spent, not reinvested. Each rung/year income is sourced from both all of the rungs (inflation adjusted) interest payments in that year and the maturing bonds value.

https://www.tipsladder.com/build?bondCh ... come=10000

barrett wrote: ↑Mon Aug 14, 2023 11:06 am

seajay wrote: ↑Sat Aug 12, 2023 2:22 pm Don't forget that with a 4% 30 year SWR TIPS ladder that assumes all is spent, no residual. For other asset allocations 4% 30 year SWR was around the worst case outcome, left nothing remaining ... but in the more usual/average case tended to leave a very decent residual amount remaining, in some cases multiples more of the inflation adjusted start date portfolio value.

This is an excellent point and one that seems to get glossed over with all the current excitement (well, maybe not on this board) about TIPS rates being strongly positive again.

You can structure your 'ladder' so as to leave a residual. Instead of all-in, running the capital totally dry at year 30 you might take the difference, 300K returned via 30 x 10K/year, and $226.5K cost as per the linked example I posted earlier/above, and invest that $73.5 in a stock accumulation fund, left as-is for the 30 years. If that stock fund grows at 6% real, then 30 years of compounding = 5.74 growth factor, turns the £73.5K initial investment into $422K (real), More than the total original start date $300K initial total investment in combined TIPS ladder and stocks.

10K income relative to 300K initial investment = 3.33% SWR, and a reasonable prospect of ending 30 years with a decent amount remaining. You might instead spend some of the stock gains, draw perhaps 2K from that initial 73.5K (2.7% SWR) to bolster the 10K (from TIPS) income to 12K combined (12K relative to 300K total investment = 4% SWR). In which case the remainder wont grow as much, perhaps at a 3.3% real rate, such that the 73.5K initially invested in stock accumulation (with 2.7% SWR) grows to 200K real. 4% total SWR resulted in ending with two-thirds of the real initial start date portfolio value remaining after 30 years (assuming stocks total returns grew at a 6% real rate).

Yes TIPS prices/values will fluctuate, the guarantee only applies providing you hold each bond to maturity, as is the intent/purpose, otherwise the early sale of bonds (and interim portfolio value) will be subject to variations.

Rather that buying individual TIPS, a alternative is to combine something like LTPZ with cash deposits. Yearly adjust your cash and LTPZ weightings to align the combined duration to your conceptual ladder duration. If LTPZ has a duration of 19 years, then that's like a 38 year ladder. If you were down to 19 years conceptual years ladder remaining, you'd weight LTPZ 50%, cash (zero duration) 50%. If a year later, when your conceptual ladder had 18 years remaining, if LTPZ duration at that time was still 19 (like a 38 year ladder), you'd revise LTPZ weighting to 18/38 = 47%, allocate 53% to cash. ...etc.

Another choice/option is if real yields are negative at the time, might cost $11K of present day money to buy $10K of inflation adjusted income in 10 years time, is to only ladder a limited number of years, perhaps 10 years, and drop the remainder into stocks. Often after a period of negative real yields so things swing the other way, the market in effect demands compensation. So after ten years as that ladder ends, so the stock growth and TIPS real yields at that time might be more favorable (sell stocks to load into a 20 year TIPS ladder).

More on this being an ideal time to purchase TIPS!

https://tipswatch.com/2023/08/14/now-is ... cted-tips/

Now is an ideal time to build a ladder of inflation-protected TIPS

Posted on August 14, 2023 by Tipswatch

It’s rare to see an alignment of attractive yields across all maturities.

Commentary on the above article ....

https://www.mymoneyblog.com/tips-real-y ... tg=9627344

TIPS Real Yields ~2% Across All Maturities; 4.4% Guaranteed 30-Year Withdrawal Rate
AUGUST 15, 2023 BY JONATHAN PING 5 COMMENTS

In addition, as David Enna of Tipswatch points out, this is the first time in a long while that all the various maturities (5/10/30 year shown below) are all around 2%.



If you wanted to, you can again construct a ladder of TIPS that will provide you a guaranteed inflation-protected income over the next 30 years (including spending down your principal) of over 4% above inflation (~4.4% as of this writing, as rates are higher today that at the time of writing for that post).

That means if you put $1,000,000 into a 30-year TIPS ladder right now, you can create ~$44,000 income for year 1 and then another ~$44,000 adjusted for inflation (CPI-U) annually for the next 29 years. All fully backed by the US government. No stock market volatility. No chance of annuity insurance company failure. Check out TipsLadder.com and Eyebonds.info if you are ready to get deep into the details.

While I am not looking into investing a lump sum into a TIPS ladder, I do own both regular US Treasuries and TIPS to provide the stable, guaranteed growth portion of my portfolio. (I’m roughly 70% stocks and 30% bonds.) If I’m getting guaranteed 5% growth from US Treasuries and guaranteed 2% + inflation from TIPS, I’m pretty happy with that for the safe part of my portfolio.

I am taking this opportunity rebalance my existing bond holdings and free cash to create an overall longer duration for my TIPS. I want to lock in that 2% real yield across longer maturities while it is available. Real yields might go even higher, but I’m more worried about it going lower than higher.

Shar

https://www.capitalspectator.com/has-tr ... tes-again/

Has Treasury Market Misjudged Timing For Peak Rates… Again?


Some analysts see opportunity from an investment perspective, reasoning that with yields near the highest in years, the ability to lock in relatively steep payout rates is compelling.

“Going up the US curve to 10 year-plus is now looking more and more interesting because we’re at the top of the range and more fundamentally the real yield is covering the trend GDP,” says Steven Major, global head of fixed-income research at HSBC.

Is this really the top? No one knows, but at least one thing is clear: we’re closer to the peak vs. last week, last month and a year ago.

yankees60 wrote: ↑Thu Aug 17, 2023 9:20 am Commentary on the above article ....

https://www.mymoneyblog.com/tips-real-y ... tg=9627344

TIPS Real Yields ~2% Across All Maturities; 4.4% Guaranteed 30-Year Withdrawal Rate
AUGUST 15, 2023 BY JONATHAN PING 5 COMMENTS

In addition, as David Enna of Tipswatch points out, this is the first time in a long while that all the various maturities (5/10/30 year shown below) are all around 2%.

Capture.JPG

If you wanted to, you can again construct a ladder of TIPS that will provide you a guaranteed inflation-protected income over the next 30 years (including spending down your principal) of over 4% above inflation (~4.4% as of this writing, as rates are higher today that at the time of writing for that post).

That means if you put $1,000,000 into a 30-year TIPS ladder right now, you can create ~$44,000 income for year 1 and then another ~$44,000 adjusted for inflation (CPI-U) annually for the next 29 years. All fully backed by the US government. No stock market volatility. No chance of annuity insurance company failure. Check out TipsLadder.com and Eyebonds.info if you are ready to get deep into the details.

While I am not looking into investing a lump sum into a TIPS ladder, I do own both regular US Treasuries and TIPS to provide the stable, guaranteed growth portion of my portfolio. (I’m roughly 70% stocks and 30% bonds.) If I’m getting guaranteed 5% growth from US Treasuries and guaranteed 2% + inflation from TIPS, I’m pretty happy with that for the safe part of my portfolio.

I am taking this opportunity rebalance my existing bond holdings and free cash to create an overall longer duration for my TIPS. I want to lock in that 2% real yield across longer maturities while it is available. Real yields might go even higher, but I’m more worried about it going lower than higher.

Shar

Instead of a 4.4% 30 year spend it all, accept 4% and drop 90% into the TIPS ladder, invest the remainder 10% into a stock accumulation fund that's left to grow for 30 years. At a 6% real rate of growth you end 30 years with 57.5% of the inflation adjusted total value still available.

seajay wrote: ↑Thu Aug 17, 2023 4:17 pm

yankees60 wrote: ↑Thu Aug 17, 2023 9:20 am
Commentary on the above article ....

https://www.mymoneyblog.com/tips-real-y ... tg=9627344

TIPS Real Yields ~2% Across All Maturities; 4.4% Guaranteed 30-Year Withdrawal Rate
AUGUST 15, 2023 BY JONATHAN PING 5 COMMENTS

In addition, as David Enna of Tipswatch points out, this is the first time in a long while that all the various maturities (5/10/30 year shown below) are all around 2%.

Capture.JPG

If you wanted to, you can again construct a ladder of TIPS that will provide you a guaranteed inflation-protected income over the next 30 years (including spending down your principal) of over 4% above inflation (~4.4% as of this writing, as rates are higher today that at the time of writing for that post).

That means if you put $1,000,000 into a 30-year TIPS ladder right now, you can create ~$44,000 income for year 1 and then another ~$44,000 adjusted for inflation (CPI-U) annually for the next 29 years. All fully backed by the US government. No stock market volatility. No chance of annuity insurance company failure. Check out TipsLadder.com and Eyebonds.info if you are ready to get deep into the details.

While I am not looking into investing a lump sum into a TIPS ladder, I do own both regular US Treasuries and TIPS to provide the stable, guaranteed growth portion of my portfolio. (I’m roughly 70% stocks and 30% bonds.) If I’m getting guaranteed 5% growth from US Treasuries and guaranteed 2% + inflation from TIPS, I’m pretty happy with that for the safe part of my portfolio.

I am taking this opportunity rebalance my existing bond holdings and free cash to create an overall longer duration for my TIPS. I want to lock in that 2% real yield across longer maturities while it is available. Real yields might go even higher, but I’m more worried about it going lower than higher.

Shar

Instead of a 4.4% 30 year spend it all, accept 4% and drop 90% into the TIPS ladder, invest the remainder 10% into a stock accumulation fund that's left to grow for 30 years. At a 6% real rate of growth you end 30 years with 57.5% of the inflation adjusted total value still available.

Seems reasonable and believable.

yankees60 wrote: ↑Thu Aug 17, 2023 4:37 pm

seajay wrote: ↑Thu Aug 17, 2023 4:17 pm

yankees60 wrote: ↑Thu Aug 17, 2023 9:20 am Commentary on the above article ....

https://www.mymoneyblog.com/tips-real-y ... tg=9627344

TIPS Real Yields ~2% Across All Maturities; 4.4% Guaranteed 30-Year Withdrawal Rate
AUGUST 15, 2023 BY JONATHAN PING 5 COMMENTS

In addition, as David Enna of Tipswatch points out, this is the first time in a long while that all the various maturities (5/10/30 year shown below) are all around 2%.

Capture.JPG

If you wanted to, you can again construct a ladder of TIPS that will provide you a guaranteed inflation-protected income over the next 30 years (including spending down your principal) of over 4% above inflation (~4.4% as of this writing, as rates are higher today that at the time of writing for that post).

That means if you put $1,000,000 into a 30-year TIPS ladder right now, you can create ~$44,000 income for year 1 and then another ~$44,000 adjusted for inflation (CPI-U) annually for the next 29 years. All fully backed by the US government. No stock market volatility. No chance of annuity insurance company failure. Check out TipsLadder.com and Eyebonds.info if you are ready to get deep into the details.

While I am not looking into investing a lump sum into a TIPS ladder, I do own both regular US Treasuries and TIPS to provide the stable, guaranteed growth portion of my portfolio. (I’m roughly 70% stocks and 30% bonds.) If I’m getting guaranteed 5% growth from US Treasuries and guaranteed 2% + inflation from TIPS, I’m pretty happy with that for the safe part of my portfolio.

I am taking this opportunity rebalance my existing bond holdings and free cash to create an overall longer duration for my TIPS. I want to lock in that 2% real yield across longer maturities while it is available. Real yields might go even higher, but I’m more worried about it going lower than higher.

Shar

Instead of a 4.4% 30 year spend it all, accept 4% and drop 90% into the TIPS ladder, invest the remainder 10% into a stock accumulation fund that's left to grow for 30 years. At a 6% real rate of growth you end 30 years with 57.5% of the inflation adjusted total value still available.

Seems reasonable and believable.

But is it a wise/good choice!

One investor might load 67% into a TIPS ladder and drop 33% into stock accumulation for growth/longevity. That transitions from 33/67 stock/bonds to 100/0 stock/bonds. Time averages 67/33 stock/bonds. Which in some respects is a popular choice (67/33 yearly rebalanced constant weighted)

Instead of a TIPS ladder a barbell of cash (money market fund) and LTPZ might be held, where each year you rebalance to duration match ... emulate a TIPS ladder. That might start with 100/0 LTPZ/cash, end with 0/100 LTPZ/cash, time averages 50/50 LTPZ/cash. So another investor might simply opt for constant weighted 66/17/17 Stocks/LTPZ/cash.

Gold is somewhat like undated inflation bond, so its also reasonable to 67/33 stocks/gold.

They'll follow different pathways, but each tending to end up in the same ballpark.

'Safe' TIPS ladder rewards are inclined to be less than 'riskier' (more volatile) alternatives. I'd be lucky to be around in another 30 years, however I'd bet that a 4% SWR from 67/33 stock/bonds or stock/gold will be more likely to have done better overall (inclined to leave more for heirs) than a 'safer' TIPS ladder. Could be wrong, but if so it might still see 25 years or more before all being spent, which is probably still better odds than me seeing another 25 years given my liking of good-things that many suggest are bad-things. With first hand experiences of seeing quality of life for 90 somethings, I'd rather exit the party earlier rather than later. Live it large to mid 80's and don't give a flying fornication for there-beyond ... and likely I wont even get to see that out.