TIPS For Reliable Income: Year-End Update

Dec. 20, 2024 12:02 AM ETTIP, VTIP, SP500, SPX
Ralph Wakerly profile picture
Ralph Wakerly
1.79K Followers
(15min)

Summary

  • TIPS offer reliable, inflation-protected income, portfolio diversification, and potential returns of 4–7% annually, making them a valuable component of a diversified portfolio.
  • Key fundamentals support TIPS, including high real rates, elevated consumer inflation expectations, and federal debt pressures, though risks like rising real rates and economic downturns exist.
  • The risk of rising real rates supports the strategy of holding individual bonds to maturity and aligning the holding period with cash flow needs.
  • Despite lukewarm investor sentiment, TIPS remain a prudent choice for conservative investors and retirees seeking stable, inflation-protected income.

Manager is showing Treasury Inflation Protected Securities TIPs.

designer491

Over the past two years, I've authored several articles detailing the case for TIPS in a diversified all-weather portfolio:

  • A reliable source of regular income above the inflation rate for retirees that can serve as a low-cost, do-it-yourself annuity.

This article was written by

Ralph Wakerly profile picture
1.79K Followers
I am an investor, entrepreneur and consultant with over 35 years of investment experience. I employ a macro-style, passive, index-based all-weather investment approach. I emphasize capital preservation, with a value orientation and contrarian bent. I manage and advise on family portfolios collectively valued in the eight-figure range. Background includes a B.S. Industrial Engineering and MBA in investments from University of Illinois, Urbana-Champaign, plus 11,000+ hours of investment management and research. Accomplished entrepreneur, consultant and business owner. My passion is to help individuals improve their financial literacy and investing skills. Besides writing for SeekingAlpha and Advisor Perspectives, I've presented at universities, churches and other community organizations.

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Disclaimer: My articles may contain statements and projections that are forward-looking in nature, and therefore inherently subject to numerous risks, uncertainties and assumptions. The information is based on my research and is subject to possible errors and omissions. While my articles focus on generating long-term risk-adjusted returns, investment decisions necessarily involve the risk of loss of principal. Individual investor circumstances vary significantly, and information gleaned from my articles should be applied to investors’ own unique investment situation, objectives, risk tolerance and investment horizon. I am not a Registered Investment Advisor or Financial Planner. I disclaim all liability with respect to investor actions taken based on the information provided here.

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SymbolLast Price% Chg
TIP--
iShares TIPS Bond ETF
VTIP--
Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares
SP500--
S&P 500 Index
SPX--
S&P 500 Index

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