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?