Are they still relevant?
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Do Treasury Inflation-Protected Securities (TIPS) still offer meaningful and compelling advantages when real yields fluctuate and many other attractive inflation-hedging options, such as commodities or equities, exist? How should investors rationally assess their relevance today?
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You are correct that Treasury Inflation-Protected Securities (TIPS) still offer a meaningful, risk-free advantage because they are explicitly designed and government-backed to maintain your purchasing power against inflation.
However, the key difference is that, unlike volatile commodities or equities, TIPS provide stability by adjusting the principal in line with the CPI. They are incredibly appealing to conservative investors, and frankly, they absolutely belong in any well-diversified portfolio to balance risk and provide a safety net against unexpected inflation.
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TIPS are government-backed and protect my purchasing power. How should I view them when real yields are low? Are they capable of aiding my long-term wealth, or would I achieve better growth by investing in stocks and inflation hedges?
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@Olivia-Davis said in Are they still relevant?:
TIPS are government-backed and protect my purchasing power. How should I view them when real yields are low? Are they capable of aiding my long-term wealth, or would I achieve better growth by investing in stocks and inflation hedges?
If you're looking at TIPS, think of them as a "defensive" play. They’re great for protecting your cash against inflation, but they won't significantly grow your wealth. For long-term gains, you're better off sticking with stocks or real assets that actually outpace rising prices.
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@HashHustler said in Are they still relevant?:
I understand conservative investors like TIPS, but if the official CPI doesn’t match my living costs, can they actually protect me? In a world of high rates and rising prices, am I better off taking measured risks elsewhere?
It's a valid concern — TIPS follow the official CPI, which often misses the real-world price hikes we all feel. Most people I know balance that by mixing TIPS with stocks or real assets to grow their wealth while keeping things safe.