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Different people have different needs. TIPs are the very best investment for a certain group of people, and a very bad investment for certain others.

TIPs give a guaranteed 3.5% inflation-adjusted forever. If you are willing to draw on your principal in mildly-increasing amounts, you can draw 4% inflation-adjusted for about 60 years, or 4.5% inflation-adjusted for over 40 years, guaranteed. No other investment can do that, even with a 98% probability of success, let alone 100%.

Example: If you retire at age 57 with no resources or income other than a million dollars in IRAs, you can draw $45,000 the first year, and increase your draw for inflation every year thereafter, with the guarantee that you will not run out of money before age 100.

If you invested in stocks instead and drew $45,000 the first year and adjusted for inflation thereafter (i.e., a 4.5% initial draw), you run a small but significant risk that you will be broke in 25 to 35 years.

For some people, TIPs are the very best investment.

Bill
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