Hi LynnC,

You may have noticed I don't offer much in the way of advice here. Beyond that, I would have to say any advice I did offer in particulars such as this is likely to come back and bite me.

My honest opinion is I do not see how we can not be headed into a higher inflation environment. This is not making predictions, it is just my opinion, and only that, an opinion. It is to the degree of inflation that would predict the need for buying TIPS at the current rate. Another good way to make an above inflation return on fixed income is in the short-term corporates; Vanguard Short-Term Investment-Grade Fund Investor Shares (VFSTX).

These are Aa2 quality, with a 3.3 yr. average return, which reduces their default risks tremendously over longer term corporate bonds. With 2.1 yr average duration, inflation is going to effect them much less than longer term bonds.

The problem with trying to time your buys is you still have to buy when everyone else sees their value. Being what some have called me, a "Lion-hearted Investor," I waited until stocks held no value I could see to buy TIPS (fund), and had to buy while the real yield was 2.2% and even under 2%.

I'm going to tell you what I do, so you can understand what I am saying better. I hate to offer these long posts as I know they make difficult reading for those who know no better than read what I write. At least I am pre-warning.

At 55, I am nearing retirement, and even considered starting Jan 1 of this year after being offered a package at work, but Wifey talked me out of it. I don't concern over market returns or the (negative) returns of my portfolio, as I would still take the same withdrawals if I chose to retire today as I would have last June when I last looked at my portfolio. A downturn in the market doesn't concern me. Maybe foolishly, I believe strongly in RTM; especially with a well diversified portfolio.

I recognized even back in 2002 when I went 100% stocks I would be needing to add fixed income eventually, but actually thought diversification in stocks was enough to keep from suffering too bad a downturn in my portfolio. Two years ago, June 2006, I became concerned with valuations on stocks as all of my stock asset classes were going up at the same time; even commodities, and I discussed this with Larry Swedroe at the time. The wide valuation differences in the stock asset classes had converged. The reason for June is this is when I get my raise, and it is the only time I look at my portfolio to make both portfolio decisions and how much of my raise I can afford to add to my savings.

My way of investing, and one I do not recommend for others, is buying into value. I only buy that which I think offers value at the time. At that time, I though TIPS was all that offered value, and stocks continued to climb through June of 2007, when I added more TIPS to my portfolio. I don't rebalance, but do sell some off the top to fund my buying.

I haven't looked at my portfolio yet, but from what I have been reading here about the market, and what I have been looking at for the performance of many stock asset classes, it looks like I might see a chance to buy into one of the stock asset classes that have corrected. If not, I will look at TIPS and ST corporates to see which offers the greatest value, or the one that has had the lowest returns (offer the better value).

After saying ‘I' a hundred times or so now, maybe ‘I' can now get to the point. ‘I' think most are better served to set their asset allocation and stick with it. If ST corporates return less they will most likely offer better value and vice-versa, TIPS; same with stocks to a degree. Simple rebalancing every few years could possibly offer better buying into value than my attempts.

Whew! More than you asked for, huh?

Chin