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Subject:  Re: I-Bond in Roth / Broker Fees? Date:  6/19/2001  8:40 AM
Author:  John3haha Number:  1667 of 36218

My discount brokerage confirmed they could not put an I-bond into an IRA, though they were unable to explain why. Thanks for that jrr7.

jrr7 wrote "If you want inflation protection, you have the ability to buy TIPS in a Roth, but the brokerage commissions will kill you."

TIPS look reasonably attractive and I think I need only pay my normal $24 commission to buy them through Waterhouse. With no loads per the prospectus (except a minimal redemption fee if under $5,000 IIRC) and 0.25% admin fee it looks reasonable at under 1% during the first year and 0.25% afterwards. I expect the TIPS turnover rate will come down to a modest level and hope they keep the term of the government bonds short enough to mitigate price swings from interest rate movements.

I expect to hold these monies in a bond vehicle for 2 years or so but have them available as a kind of back-up emergency fund if needed. The money market fund rates have fallen, obviously, and I now want to make a move with a bit under $4K.

Dumb question, the TIPS prospectus listed interest rates on its bond holdings of around 3%. Is this the "real" yield prior to addition of the CPI-U or whatever model the bonds have been linked to? I hope to be earning around 6% in total yield ("real" yield plus inflation) before factoring in price changes from interest rate movements.

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