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TIPS pricing has improved compared to 1-2 months ago. Nothing quite like Ibonds unfortunately.
Hi Devesh, thank you for your article on TIPS. That explains what I am experiencing loss in my 5-yr TIPs and STIP at the time of high inflation. The Fed’s aggressive rake hikes are causing the bond price to fall and there are more to come through 2023. I paused to participate in October 13th’s 5-yr TIPS auction. Is there other instruments other than IBond that can fight against high inflation we are experiencing today? Thanks.
Devesh, Thanks for the reminder. The negative asset correlation quote came from TIAA's literature and it was quoted in Mark's article. Looking back REA's yearly performance, 2007-2008 were particularly painfully with sizable loss of over 20%. That was the period all asset correlation collapsed and diversification across many asset classes did not help. Other years the REA did fine. Afterward, it took several years to fully recover. Since mid-2021, I have reduced risky asset and invested defensively until the high inflation spiked upward this year. I have added I-bonds and additional TIPS (at auction). Next are treasury.
Private REIT is very intriguing but don't take the negative asset correlation too seriously. in the long run, when economy grows and functions as it should, all assets should do well. In a serious crash, all assets will go down. Private is not a free lunch.
Devo, Thank you for sharing your very wise comment and investment approach. I agree with your assessment on rental income aspect of REITs. I too tend to start slow on new investment in order to validate the original thesis. This private market REIT fund is very intriguing, especially the negative asset correlation to the asset classes of bonds and stocks. Once again, thank you for sharing. Sven
Sven, I think Real Estate is an authentic asset class. Rental incomes are a real thing. Just like bond interest and equity dividends. So one way or the other we all need exposure to more of the authentic asset classes so we stop wasting time on other things. I dont know what the future performance of this particular account will be since I am not an investor and I dont pay too much attention to it. In general, when adding new investments to my portfolio, especially things I dont know much about from experience, I go slow. I want to do something because I want to learn. But I dont want to too much because I dont want too many lessons right away! So if you build up the asset slowly I am sure you will learn and it will grow with you.
Devo, it was Marks article that got me thinking about real estate. As you stated in your video I have little luck investing in public market REIT. After doing more research, I uncover more about TIAA REA and it’s limitations. As government employees we are “qualified” participants. Still working through their phone in order to set up an IRA account. At present’s COVID recovery, do you think REITs are still attractive for the next few years? 2008 was one of the few bad year the TIAA REA had.
Good morning Sven. Thank you for writing and letting me know you are enjoying the material. I do not have an investment in TIAA REA because you either have it from the employer or you don't. I have friends who are invested in that account. David Snowball has an investment there. And Mark wrote an article on Real Estate in the June MFO issue which discussed the mechanics of the REA. Unfortunately, I haven't been able to get invested there.
@Devo, Really enjoy your writing and YouTube series. In one of your YouTube video, you mentioned TIAA Real Estate Account as a way to gain access to private real estate? Do you invested in the TIAA REA? Thanks. Sven