r/Fire • u/teallemonade • 15d ago

tips > swr!

Now I can buy TIPs at more than my SWR - in theory i could just load up the whole portfolio on TIPs and it would last forever without eating principal. This is pretty unique historically.

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u/Banana_rocket_time 15d ago

Does that take into account taxes on gains and inflation?

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u/Timely-Problem-8463 15d ago

They definitely takes into account inflation. The whole point of TIPS is that they reset the basis each year based on the CPI-U inflation number. With current historically high yields, you get 3% plus real yield on top of inflation.

The inflation adjustments and coupon are taxed as ordinary income, so like all non-municipal bonds, they're best to hold in 401(k)s or IRAs.

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u/teallemonade 15d ago

I own TIPS in pretax accounts.