Monday, February 7, 2011

The Sarcasm Report v.88

TIPS Aren't Much Help for Retired Investors

And the challenge today is that you have no idea what inflation will be over the next 10 years.

That certainly is a challenge. I wish there was a product that allowed me to worry less about it. I wish there was something issued by the government that was tied to the inflation rate and offers some bonus interest. That way, as a retired investor, I wouldn't need to worry as much about that risk.

If it's low, you could get stuck with a pile of TIPS that don't produce much income...

Low inflation is bad for TIPS investors? The more taxes I pay on my inflationary gains the better? I never really thought of that way before. I guess it makes sense if I can believe what I read.

...and if it's high, TIPS will help, but not until many years down the road when you receive your adjusted principal value at maturity.

I should root for hyperinflation so that TIPS can offer maximum help. I'm a bit bummed that I might need to wait many years though. This is the era of instant gratification after all.

Bottom line. TIPS are a very good inflation hedge if you simply want to hedge the value of your portfolio over say a 10 year period.

And yet we know from the article's title that TIPS aren't much help for retired investors. Talk about a paradox.

But if you need to live off your money, because of today's low rates, TIPS may not be the silver bullet investment for retirees.

Oh. I get it. Some retirees "need" more than TIPS can offer. They "need" their money to generate even more money. The article just ends though. What a letdown. There's no more advice. Stock market trading? Futures trading? Commodity speculation? Real estate speculation? Lottery tickets? What should retirees do?


CP said...

Duh, you buy AAPL!

mab said...

What should retirees do?


I'd say spend less, but the article has me thinking they should seek out financial "experts", day trade and buy gold or whatever else that has seen its price quadruple.

Deworsification for the win!

mab said...

Holy cow! I just received a message from the top of Candy Mountain.

My word verification was "itsup".

Now we have it. Our grand unified theory. If "itsup" BUY IT!

Stagflationary Mark said...


Hahaha! Thanks for being specific. I nearly went out and bought fruit.


Spend less? No need to get hasty. I left casino off the list. Vegas baby! Nobody ever loses money there!

I am a bit concerned about their ad campaign though.

What happens in Vegas, stays in Vegas.™

Does that apply to money?