Post #191 by sutton on the Retirement Investing board

Personal Finance Topics / Retirement Investing

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The comments that there is no point opting for the extra protection offered by TIPS mystifiy me...plain bonds are certificates of confiscation, sometimes.
If inflation rises, you can be more or less wiped out. Check the real total return on 10- or long-bonds in the inflationary years. Why take that risk if there is absolutely no advantage in doing so?

Jim:

This makes perfect sense to me *if*:

1) I'm allowed to replace "TIPS" with "individual Treasury securities e.g. TIPS, Treasury bills, and iBonds", and

2) to replace "plain bonds" with "bond funds, including not only corporate but also US Treasury bond funds"

In other words, if I spend $10K for shares of Suttons Universal Conservative Kingdom Eternal Refuge Bond Fund (ticker: SUCKER), it's a good question how much of that $10K I'll ever see again.

But if I buy an individual 5% 6 month $10K T bill (CUSIP 1234567) today, I'll spend $9750 and am certain to get back $10,000 at the end of March.

It doesn't have to be a muliyear TIPS?

Otherwise: please (attempt to) educate me.

Thanks

--sutton

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