When do TIPS make the most sense for investors? I’m nearing retirement and am very conservative with my investments.

TIPS make the most sense for clients who are most exposed to the risks of high unexpected inflation. Retirees with conservative portfolios are generally included in this category. On the one hand, retirees no longer have the benefit of earned income, which generally keeps pace with inflation.

On the other hand, a conservative portfolio will not be heavily exposed to asset classes (such as stocks, real estate or commodities) that in the long run may offer a certain amount of protection against inflation. Thus, retirees with conservative allocations generally benefit from investing in TIPS. However, there are exceptions. For example, retirees who have an inflation-adjusted pension, or whose spending includes substantial items not subject to inflation adjustments (such as a fixed rate mortgage), may need less exposure to TIPS than retirees with no inflation-adjusted sources of income and whose entire spending needs increase with inflation over time.

This portion of Buckingham's Web site offers an interactive dialogue with Buckingham investment professionals and other personnel. It is important to recognize that many factors, including but not limited to time and changing market conditions, may cause such discussion to no longer be reflective of current thinking, positions or recommendations. Additionally, it is important to recognize that the information provided is for general educational purposes only and in no way is intended to viewed as, or a substitute for, personalized investment advice. Buckingham does not provide legal or tax advice you should consult with an investment professional, as well as legal and tax counsel regarding your specific financial circumstances.