It sounds like you're assuming that people investing in TIPS plan to live off the coupons?The other problem with this approach is how expensive it is up front to set it up to provides only a 1% - 2% real return based on current pricing. It costs 1 million dollars up front to guarantee an annual 10K - 20 K real income stream/yr going forward and that is before taxes which can be high with TIPS.
A TIPS ladder generally assumes that you'll live off the principal, not the coupons. A TIPS ladder is not primarily about return. It's about protecting assets from inflation until you're ready to spend them. Coupon payments are not the point; if they happen (people were buying TIPS even when real yields were negative) they're a bonus.
Statistics: Posted by BirdFood — Thu Sep 12, 2024 6:27 pm — Replies 76 — Views 4624