Gyroscopic Investing

There’s an intelligent poster on Bogleheads (willthrill81) who unlike many others on that forum understands and respects the PP. He proposed this substitution in the GB.

Of course I’m familiar with the arguments against TIPS made in the PP book and elsewhere but they’re largely based on their anomalous performance during the 2008 market meltdown. It’s hard for me to see how 7 year duration TIPS or even a mixture of VIPSX and shorter-duration VTIP plus as close to 100% iBonds as you can get for the cash portion given the paltry annual purchase limits wouldn’t make sense.

Interested to hear other’s thoughts.

Kevin K. wrote: ↑Sat Apr 16, 2022 4:23 pm There’s an intelligent poster on Bogleheads (willthrill81) who unlike many others on that forum understands and respects the PP. He proposed this substitution in the GB.

Of course I’m familiar with the arguments against TIPS made in the PP book and elsewhere but they’re largely based on their anomalous performance during the 2008 market meltdown. It’s hard for me to see how 7 year duration TIPS or even a mixture of VIPSX and shorter-duration VTIP plus as close to 100% iBonds as you can get for the cash portion given the paltry annual purchase limits wouldn’t make sense.

Interested to hear other’s thoughts.

I think iBonds are a great deal right now. I've been maxing out what I can put in there last year and this year. So far I'm not a big fan of TIPS, which is what a quick look at VIPSX shows it invests in. I don't know a lot about TIPS but it appears they don't actually keep up with inflation. I think Long Term Bonds aren't that great anymore. They act as a counter-balance with very little return. when interest rates rise it will take years for the bonds to break even. If rates were 6 or 8 percent on long bonds then at least we'd be paid for holding them. Then again I don't expect the rates to get too high because the government can't afford high rates, plus higher rates will crash the economy. So likely, the rates will go up until the feds break something, then they'll come back down. but in the long haul, you'll only get your ~2 percent on long treas bonds.

My 0.02 is that iBonds are great, but I'm leery of TIPS and funds that hold them. Granted I'm not very educated on TIPS.

Go here and read the Q&A on both TIPS and I-Bonds. https://tipswatch.com/

They are excellent primers