McLean Asset Management

For a lot of people, retirement planning is a team sport. Unfortunately, it’s incredibly common for folks in the same household to have very different ideas of both what they want out of retirement, and what their retirement will actually look like. It’s never intentional – they just never actually talk about it. Not to…

Normally with these reviews, we look at something related to investing, or some direct financial planning issue. But we’re going to switch it up this week. More and more of our life, especially our financial life, is happening online now. This is massively more convenient for almost everyone, but there are real risks. There are…

To economists, especially finance folks, prices are near magical things. There’s a near infinite amount of information packed into that number. Prices make the economy work. And they work in the real world, too. Absent other information, prices are usually a decent proxy for value. It’s pretty safe to assume that a $100 steak will…

Traditional bonds are priced around the objective of getting a return that exceeds expected inflation. If inflation is unexpectedly high, then the real return on nominal bonds is less. TIPS, on the other hand, keep pace with higher inflation, because it triggers a higher nominal return above their underlying real interest rate. Essentially, TIPS provide…

Today, I want to talk about what TIPS can tell us about inflation. Exhibit 1 shows the TIPS yield curve for January 3, 2017. Yields are negative for TIPS maturing prior to 2022, and positive beyond that, although the longest ones do not even reach 1%. The Treasury stopped issuing thirty-year TIPS in the early…

Retirement is expensive. We know this. Most people aren’t adequately prepared for retirement. We also know this. And the situation just keeps getting worse. Medical science just keeps getting better, which means we’re living longer than ever (feels strange to call this a bad thing, but from a financial perspective it makes retirement more expensive), and…

It’s become an article of faith lately that bond yields have to go up – just like they were supposed to last year. Well, the market continues to confound the market timers. Bond yields are actually down. This is a good reminder that the market doesn’t actually care what you think. It’s going to do…

The U.S. began issuing Treasury Inflation-Protected Securities (TIPS) in 1997. Backed by the full faith and credit of the U.S. government and assurances that inflation cannot eat away at their value, TIPS provide a risk-free asset for U.S.-based investors. The face value and coupon payments are both indexed to keep pace with inflation and preserve…

Understanding the relationship between bond risk and time to maturity and duration of a bond provides the basis for understanding the bond yield curve. The yield curve shows the yields to maturity for a series of bonds — typically U.S. Treasury bonds — with the same credit quality but different maturity dates, along with the…