It isn’t that simple. Inflation indexed bonds have a coupon and a factor.
As inflation goes up, the factor goes up. Yay, keeping up with inflation!
But as market interest rates go up, the price of your bond with the lower interest rate goes down. Boo, crippling losses!
Now you can buy Series I Bonds to avoid this interest rate risk (i.e. duration) but you’re limited to $10,000 per year per social security number.
If you’re worried about inflation the best thing to buy is a productive asset. Like stock in a profitable business. That is… until so many people do that it makes every company wildly overpriced.
It isn’t that simple. Inflation indexed bonds have a coupon and a factor.
As inflation goes up, the factor goes up. Yay, keeping up with inflation!
But as market interest rates go up, the price of your bond with the lower interest rate goes down. Boo, crippling losses!
Now you can buy Series I Bonds to avoid this interest rate risk (i.e. duration) but you’re limited to $10,000 per year per social security number.
If you’re worried about inflation the best thing to buy is a productive asset. Like stock in a profitable business. That is… until so many people do that it makes every company wildly overpriced.
Wow this stuff is hard.