How are you dealing with inflation?

[dado potato]

I've not changed anything spending wise, but I've been looking at TIPS as an investment.

For several years I have been purchasing my limit of Treasury I Savings Bonds. I intend to go on buying the limit each January, as long as I can. TIPs can and do sometimes decline in price. (I think a short duration TIPs fund, such as VTIPX, may be a sensible alternative to a short term CD) I Bonds increase in value every month according to changes in the CPI, the variable rate of interest being updated by the Treasury every 6 months.

A credible source of information and analysis on inflation-protected Treasury securities is David Enna http://tipswatch.com

[Rogar]

For several years I have been purchasing my limit of Treasury I Savings Bonds. I intend to go on buying the limit each January, as long as I can. TIPs can and do sometimes decline in price. (I think a short duration TIPs fund, such as VTIPX, may be a sensible alternative to a short term CD) I Bonds increase in value every month according to changes in the CPI, the variable rate of interest being updated by the Treasury every 6 months.

A credible source of information and analysis on inflation-protected Treasury securities is David Enna http://tipswatch.com

Thanks for the additional information. I haven't kept up with ibond purchases for some time, but have a handful back when the purchase limit was higher and the fixed rate was actually a positive number. I've never regretted having them. Ibonds are slightly complicated and if a person needs to invest larger amounts, the annual purchase limits are slightly low, which may be reasons why they are not more popular. I've not given up on TIPS having their place too, and appreciate the link and VTIPX suggestion.

[dado potato]

The symbol for the Vanguard Short Term Inflation Protected Index Fund is VITPX, and the comparable ETF symbol is VTIP.

These securities have gone up in price, and I think that is mainly because investors are expecting a more rapid rate of increase in the CPI. The FRED graph of the Real 10 Year Treasury Yield shows a low of -1.19% August 3, 2021 and a more recent -1.17% November 9. In the auctions of TIPs, I have been amazed to see price premiums that result in negative yields like these. But I understand that in the UK, inflation-protected gilts have traded at a real rate of -3%. So I can imagine CPI reports that continue to "surprise everybody" on the upside.

TIPs are most useful in a portfolio when inflation is higher than the market was expecting at the time the TIPs was purchased. Remember when Fed governors used to say, "Inflation expectations remain well anchored..."? And they seemed to wish for a 2% annual change in CPI?

I bonds do not have the volatility of TIPS. If you buy Treasury I bonds you are not able to redeem them until at least 1 year later. So I bonds are definitely not for every saver!

[frugal-one]

Also Ibonds do not let you designate a beneficiary. So imagine this would have to go through probate?

[dado potato]

Also Ibonds do not let you designate a beneficiary. So imagine this would have to go through probate?

At the account level I believe it is true that Treasury Direct does not allow a beneficiary, as may be the case with a brokerage account. However at the level of the individual I Bond holding, the buyer may designate a beneficiary or second owner (with rights either to view or transact that holding). It is possible to buy I Bonds, name a beneficiary at any time for that bond, and change the beneficiary at will.

I am not a lawyer, but I believe that if an I Bond has a second owner or a beneficiary on record at Treasury Direct, the bond would not go through probate.

thefinancebuff.com/i-bonds-beneficiary-vs-second-owner-treasury-direct.html

[Yppej]

One guy at work gave me a cannoli, another gave me 9 eggs. The boss bought a new bunch of snacks today. We are on track for our monthly goal which will entitle us to a free breakfast. In less than a month we have our holiday party with a free dinner and drinks. I love my job!

[ToomuchStuff]

One guy at work gave me a cannoli, another gave me 9 eggs. The boss bought a new bunch of snacks today. We are on track for our monthly goal which will entitle us to a free breakfast. In less than a month we have our holiday party with a free dinner and drinks. I love my job!

Leave the boss, take the cannoli.

[frugal-one]

Thanks dado… when I get back home I will dig the bonds out. I purchased them many years ago through payroll deduct and don’t believe there was a beneficiary designation.

[GL from QC]

I deal with inflation by cutting down on my expenses and simplifying my lifestyle. ¯\_(ツ)_/¯
Moved from the US to Canada (Toronto, to be precise) a couple of years ago, then became a permanent resident, and was finally able to quit my job. Toronto tries too hard to be like NYC... It's kind of adorable, really: their version of Times Square has billboards with large burned-out pixels, and their subway shuts down around 11pm. (Good luck walking home from a party haha) It kept getting more and more expensive there, too, so I moved to Quebec City instead.

Quebec is the only Canadian province with rent control, so I got a beautiful one-bedroom rental for just $595 CAD ($471 USD) a month, and that includes fast internet and utilities. Altogether, my combined monthly expenses are just $1,200 USD now, or $14,400 per year. That includes going out to eat once a week, and buying a cheap bottle of red wine (I can't taste the difference haha) when I go grocery-shopping every 9 days or so. Oh, and I sold the car just before the move - QC is a very pedestrian-friendly city, and I would've had to pay for parking + gas + insurance + registration...

My life is a whole lot cheaper and simpler now. I know that for many people, moving to a cheaper location is not an option, but it can be pretty beneficial, eh.

[Simplemind]

You are living my dream GL. I just love Quebec City.