The primary provider of inflation-adjusted securities in the United States is the federal government, which includes Treasury inflation-protected securities (TIPS). These bonds ensure that investors receive a genuine rate of return. On the show Decoding Retirement with Robert Powell, Lawrence Sprung, founder of Mitlin Financial and a wealth advisor, emphasized the significance of TIPS for investors.
“I truly believe it is essential for everyone to have a strategy, whether you’re already retired or heading towards that stage,” Sprung stated. As we possibly move into a time of reduced interest rates, it will be critical to develop that strategy. This may involve options like CDs, TIPS, and similar instruments; they must start evaluating what will be most beneficial for them moving forward.”
The real rate of return refers to the genuine yield on an investment after factoring in inflation.
It reflects how your purchasing power has either improved or diminished over time. In contrast, the nominal rate of return is the straightforward percentage increase in your asset value over a certain time frame, ignoring aspects like inflation or taxation.
Utilizing TIPS in Retirement Strategies
This is the “face value” associated with the growth of your investment. Real estate investment trusts (REITs) provide individuals with a chance to invest in substantial, income-producing properties. A REIT is a corporation that owns and frequently manages various real estate assets, which may include office buildings, shopping complexes, residential units, hotels, resorts, self-storage units, warehouses, and even financial instruments like mortgages or loans.
“And I’ll share something we’ve experienced with families we’ve assisted. They come across specific investments, and I’m not criticizing REITs; they are solid investments for suitable individuals,” Sprung mentioned.
“People have approached us, asking, ‘I see this REIT offering an eight, nine, or ten percent yield; why aren’t we investing there?’ While that 10 percent return sounds attractive at first glance, one must consider the overall performance of the investment. If it has underperformed, then that 10 percent may not represent your actual return.”
Planning for retirement does not equate to simply setting your money aside for future needs and neglecting it. Preparing for your future necessitates adapting to current developments.
Decoding Retirement equips you with the resources to respond to the years ahead and to take proactive steps today.
