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Author: WendyBG Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35400  
Subject: How to buy TIPS? Date: 11/23/2005 1:04 AM
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Having been convinced by Loki that the 5-year yields more than the I-Bond :-), I tried to buy an October, 31 2005 5-year TIPS. Fidelity only carries 10-year TIPS. The Treasury Direct web site offered a calendar, to fill in the order for the 5-year TIPS, but when I placed the order for October 31, it changed the date to April 2006.

So...how do I go about buying a 5-year TIPS, without waiting until the next auction, in 2006?

Wendy
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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14290 of 35400
Subject: Re: How to buy TIPS? Date: 11/23/2005 8:45 AM
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Having been convinced by Loki that the 5-year yields more than the I-Bond :-), I tried to buy an October, 31 2005 5-year TIPS. Fidelity only carries 10-year TIPS. The Treasury Direct web site offered a calendar, to fill in the order for the 5-year TIPS, but when I placed the order for October 31, it changed the date to April 2006.

So...how do I go about buying a 5-year TIPS, without waiting until the next auction, in 2006?

Wendy,

Since I find Vanguard brokerage cheaper and easier than Treasury Direct, I don't know how to buy existing bonds through TD, but I think it is different than bidding at auction. Are you sure you used their bond sales option (I believe the charge was $50 when I looked for the FAQs)?

A quick check of the no-log-in search via bondsonline (Zion bank) shows listings for 5-year TIPS from April (the latest official offering)

http://www.bondsonline.com/Trade_Bonds/

I'm surprised Fidelity, which is much more big league than Zion, doesn't have any.

Personally, I've decided only to buy TIPS at auction, since Vanguard's charge will shave off about .2%-.4% of yield (at amounts I'm likely to buy at a shot), unless there is some compelling reason for thinking the fixed yield is way too high compared to other options. I really can't see any reason to buy 5-year TIPS now, as opposed to 5-year CDs, if you have to pay a sales charge, especially since you should be able to get CDs for a much higher yield than the fixed TIPS yield plus trader estimates for inflation.

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Author: KenAtPcs Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14294 of 35400
Subject: Re: How to buy TIPS? Date: 11/23/2005 10:34 AM
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Wendy,

Fidelity only carries 10-year TIPS.

You might want to call the bond desk and talk to someone. Fidelity used to offer all TIPS that were available on the secondary market, but looking at their website now, I couldn't find a single issue. That just doesn't seem right.

If you can, you might want to consider opening a Vanguard Brokerage account. (They have an annual maintenance fee, though, for many accounts, so it has to make sense for your situation.) They definitely offer all TIPS available on the secondary market, and their bid/ask spread is among the smallest around. (About 6? months ago, someone posted another broker who offered very good bid/ask spreads, but I don't recall their name. You might look back and find it if you're interested.)

Ken

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Author: KenAtPcs Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14295 of 35400
Subject: Re: How to buy TIPS? Date: 11/23/2005 10:36 AM
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Darn.

I looked for a response before replying, but somehow I missed Loki's anyway. :(

Zion's bondsonline.com was the name I was trying to think of.

Ken

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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14298 of 35400
Subject: Re: How to buy TIPS? Date: 11/23/2005 11:19 AM
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"Zion's bondsonline.com was the name I was trying to think of."

Ken,

I have no idea if Zion is a good place to buy bonds. At this point, you can search for bonds on their site without having to log on, which is convenient when you need a quick look to answer a question.


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Author: KenAtPcs Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14305 of 35400
Subject: Re: How to buy TIPS? Date: 11/23/2005 1:23 PM
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I have no idea if Zion is a good place to buy bonds.

True, nor do I. But as I recall, when I compared their bid/ask spread with Vanguard's, at least some of the bonds I looked at compared favorably.

Ken

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