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how TIPS ladders, other bond ladders, CD ladders should be represented in portfolio #289

Open rrelyea opened 5 months ago

rrelyea commented 5 months ago

Forum comment by me: https://www.bogleheads.org/forum/viewtopic.php?p=7685300#p7685300

This exchange reminds me that I have recently been thinking through how TIPS ladders, other bond ladders, CD ladders should be represented in portfolio spreadsheets or tools. Haven't come to a conclusion in my mind yet...but my current favorite is: allow marking some assets as "not part of portfolio". Asset Allocation calculations, net worth views, and some other views of your portfolio would ignore those assets. However, this points to the need of tracking your future expected income, which different spreadsheets and tools do many different ways. Social Security, pensions, ladders, annuities, etc...

rrelyea commented 5 months ago

watchnerd reply (https://www.bogleheads.org/forum/viewtopic.php?p=7685364#p7685364):

I treat the LMP TIPS ladder as a completely separate portfoflio.

In addition to having the goal of providing an income stream similar to SS, it's also non-rolling, so will get consumed over time.

This ends up leading to a rising equity glide path, rather than a static AA.

But from an AA tracking POV, I mostly ignore the TIPS ladder.

rrelyea commented 5 months ago

2 other examples ideally wouldn't be held in your "investable assets":

rrelyea commented 5 months ago

afan replied to watchnerd:

Pretty much what I do. I do not ignore the TIPS in tracking my AA. I recognize that they represent the bulk of bond holdings. But since there are TIPS and SS, I do not rebalance my allocations. I keep saving money and it goes into stocks. So, like you my equity allocation continues to increase on its own.