From listening to a lecture by
Zvi Bodie, I learned about these fantastic things they have in America called
iBonds and
TIPS.
These are bonds that can be purchased directly, priced at face value, and earn interest above inflation.
It seems like this is almost an ideal investment for most of a portfolio, especially in early retirement.
1. You can maintain principle
2. You can earn interest
3. You can avoid inflation
I would ideally like to have 50% or more of my portfolio in such a low-risk investment, if it were available to me.
Unfortunately, as far as I know, this is a US-only investment.
For Australian investors:
The closest thing I could find is
eTIBs. Unfortunately these can only be purchased from the ASX via a broker or online brokerage, which causes the price to fluctuate.
For example, at the moment, for the
21 August 2035 2.00% eTIB (GSIO35) CMC Markets is quoting me $149.990. (See screenshot)
This is, of course, far above the $100 face value, so maybe not a good deal (though I'd have to run numbers I guess to work out whether it would be a guaranteed net loss after compounding interest and ex. expected inflation).
Does any non-US person know if there any foreign equivalents of directly-held, inflation-protected bonds for, e.g., UK, Australian or Canadian investors?
If not, are you jealous of the Americans having such awesome investments? :D
Or any general thoughts?