Fellow investors,

You might spend some of a staycation playing golf, camping or binge-watching your favorite TV show. I spent some of mine buying inflation-protected bonds.

Treasury Inflation-Protected Securities are the closest thing to a risk-free investment. Last week, I sat on the screen porch with an iced tea and put a substantial part of my IRA into TIPS at real yields of up to 3%. (I didn't buy a TIPS ETF or mutual fund; I bought individual TIPS on the secondary market, in my brokerage account.) That means I'll earn as much as 3% above the rate of inflation for as long as 20 years, which makes me feel good.

What makes me feel bad is that "the closest thing to a risk-free investment" isn't as close as it used to be. The gross U.S. debt surpassed $40 trillion earlier this month-approaching its highest level, as a percentage of GDP, since shortly after World War II. Net interest payments, which consumed only 1.3% of GDP in 2016, totaled 3.2% of GDP in 2025. And, with bond yields at their highest in nearly two decades, that interest burden is almost sure to balloon.

Yields on conventional U.S. debt are rising because investors no longer regard Treasurys as safe, says Hanno Lustig, an economist at Stanford University.

But TIPS, through their inflation protection, mitigate some of the risk of lending to Uncle Sam if he turns reckless. As the financial historians and investment theorists Ed McQuarrie and Bill Bernstein wrote recently, "Long TIPS once again yield 3.0% [above inflation] and, as in 2008, these rates may not last long. That means: You snooze, you lose. The time to buy TIPS is now."

Note that you can lock in today's historically generous rates if, but only if, you buy individual TIPS (not a TIPS fund) and hold them to maturity.

If you're young, or if you're in or near retirement with plentiful pension income, you probably don't need TIPS. But most middle-aged investors should consider them-nervously, but seriously.

Here are some earlier pieces I've written on TIPS: The Investment That Can Shield You in Uncertain Times Inflation Isn't Going Away? Some Tips on How to Buy TIPS More Tips on TIPS What to Buy if the Election Has You Worrying About Inflation

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Catching Up

My last column, What to Ask When Your Adviser Pushes Private Funds, offered a set of questions investors can ask when someone pitches "alternatives" like private equity or nontraded real estate.

As usual, some readers had ideas I like even more. Ask your adviser these questions, too:

Chris Kawaja commented:

The better question is usually: Can I get exposure to this in the public markets, even imperfectly? And the answer is almost always yes.

Michael Golden emailed:

Explain to me the ways in which my and the fund's sponsor's (and your) interests are not aligned, and the flexibility the fund's sponsor has to favor its interests over mine.

Andrew Flaster suggested several excellent questions, including:

How many years on average has it been since the fund returned the original investment in cash? Have their recent funds returned cash yet? What's the same time period on an after-tax basis? Is there any ability to cash out before dissolution? And if so, on what terms?

As I wrote, "Good questions are every investor's best defense."

Happy 96th Birthday, Warren Buffett

On Aug. 30, Warren Buffett will turn 96.

The week of his 90th birthday, I wrote:

"I've long recommended," Mr. Buffett told me in an email earlier this month, "what I called 'The Methuselah Technique.'" That, as he explained in a letter he wrote to the investors in his limited partnership on Jan. 18, 1965, is the combination of a long life and a stable, attractive investment return. Mr. Buffett made his first investment, three shares of Cities Service Co., more than 78 years ago. "The model seems to be working," Mr. Buffett quipped in his email, "but I'm only about 9% of the way home." (At 90, he will be approximately 9% of the age of 969 ascribed to Methuselah in the Bible.) From the earliest age, Mr. Buffett has understood that building wealth depends not only on how much your money grows, but also on how long it grows.

Here's the key part of Buffett's 1965 letter.

"A long life" and "a high compound rate" don't get much longer and higher than Buffett's.

Money Mailbag

Have a question you'd like me to answer?

Want to weigh in on what you just read? Got a tip on something that I or my colleagues should investigate? Itching to tell me I'm wrong about something?

Just email intelligentinvestor@wsj.com and I'll see your note. Don't forget to include your name and city.

Be well and invest well,

Jason

Last Word

About The Intelligent Investor

In The Intelligent Investor, Jason Zweig writes about investment strategy and how to think about money. To send feedback, reply to this email or send a note to intelligentinvestor@wsj.com. Sign up to get an email alert every time Jason publishes a column. Got a tip for us? Here's how to submit.

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