Of course this depends on if you are purchasing in a taxable, tax deferred or Roth account.So about 0.81% real yield is your minimum threshold?I want a positive real yield after taxes assuming a 22% tax rate. I use 2.9% as my historical inflation for my calc. Unexpected high inflation could still make you negative real, but you won’t be as bad off as in nominals.At what minimum real yield are long TIPS worth buying?What should this topic's current title be revised to read?
I've been using TIPS coupons to buy more LTPZ lately, with a bunch more to come on October 15, so I guess 1.94% (20-year close today) is good enough for a small commitment. Building a whole ladder? IDK.
Using round numbers, assuming 3% inflation and 25% tax rate, you need 1% real yield to break even after taxes.
That is a decent framework, but also raises the question: if real yields drop below your threshold, what do you buy instead? Equities?
Statistics: Posted by TheTimeLord — Wed Oct 09, 2024 9:38 pm