I don't see why long-duration TIPS are necessarily the best choice. Short TIPS are much better for dealing with unexpected inflation - which is why Vanguard uses them in their Target Retirement funds:
"Although the risk of inflation is always present, it’s primarily in the later stages that investors must focus on tools to provide some protection. This is because in the accumulation stage, inflation protection can be effectively provided from salaries and higher real returning assets, such as equities. But once in retirement, it is much more difficult to add to a portfolio through additional earnings. Therefore, investors must balance the need to preserve capital though bonds and cash with the need to preserve their purchasing power.
Because inflation-protected securities adjust to changes in inflation quickly, TIPS are an appropriate substitute for a portion of the portfolio’s equity allocation during retirement."
And FWIW, VTIP has outperformed both nominals of the same duration (VGSH) and intermediate and long-term TIPS by a wide margin:
https://www.portfoliovisualizer.com/bac ... 6952Gqwndl
"Although the risk of inflation is always present, it’s primarily in the later stages that investors must focus on tools to provide some protection. This is because in the accumulation stage, inflation protection can be effectively provided from salaries and higher real returning assets, such as equities. But once in retirement, it is much more difficult to add to a portfolio through additional earnings. Therefore, investors must balance the need to preserve capital though bonds and cash with the need to preserve their purchasing power.
Because inflation-protected securities adjust to changes in inflation quickly, TIPS are an appropriate substitute for a portion of the portfolio’s equity allocation during retirement."
And FWIW, VTIP has outperformed both nominals of the same duration (VGSH) and intermediate and long-term TIPS by a wide margin:
https://www.portfoliovisualizer.com/bac ... 6952Gqwndl
Statistics: Posted by Kevin K — Sat May 11, 2024 9:50 am — Replies 83 — Views 5574