No. of Recommendations: 0
The thing that could hurt more is inflation heating up, so owning an iBond fund would help there. Do you have that option in your 457b or in a separate IRA? I read an article about being "inflation agnostic," which essentially meant keeping equal amounts of regular bonds and iBonds.

Some confusion here?


I don't think so. If you thought inflation was about to increase, you'd own more iBonds (individually or through mutual funds and ETFs) so that you'd do well on the inflation component of the bonds despite the low base interest rate. If you thought we'd be free from inflation, you'd own regular bonds/funds/ETFs to grab the higher coupon rate since the inflation adjustment wouldn't be much if you were correct. If you didn't want to have a bet on inflation, you'd own equal amounts of iBonds and regular bonds (funds, ETFs).

As I have been rebalancing my portfolio, I've been leaning more towards iBond funds (like the VIPSX you mentioned) more than increasing my AGG, etc., holdings because I have many times more in regular bond funds than iBond funds. That has worked out well over the last two years coincidentally. I don't feel like I need equal amounts, but wanted to reduce the disparity.

I guess the "agnostic" part means that you don't know if there'll be inflation or not.
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.