This forum has many great threads around bonds.
As I’ve read more about nominal bonds verses TIPS, I am struggling to find a compelling reason to hold nominal bonds at all, other than they “might” make more money in the long-run. Is there some other good reason?
1. It seems Bogleheads largely agree that inflation is the biggest risk to bonds (or your money in general.)
2. It also seems Bogleheads largely agree that the fixed income portion of your portfolio should be for safety, not returns. (That’s what stocks are for.)
If these two things are true, then TIPS would pass the test the better fixed income investment, no? TIPS virtually insure your money against unexpected inflation, and they are safe (in the sense that they will not default and will not fluctuate much in value.)
Nominal bonds do not pass the first test regarding inflation. Well at least unexpected inflation.
Isn’t this case closed? TIPS are the better option for long-term investors. Am I missing something?
Nothing missing that I can see, and you can stop right there. Well said.
"Bogleheads largely agree that inflation is the biggest risk to bonds (or your money in general)."
My version is, "Inflation is the one thing that could really kill my chances to live comfortably on my investments (plus SS) until the end."
And now I can stop right there.
Statistics: Posted by Johnnie — Wed Oct 09, 2024 8:43 pm — Replies 12 — Views 809