No. of Recommendations: 3
I have written extensively on TIPS before. You can look up those posts and also the FoolWiki I wrote.

In my opinion, this is not a good time to put fresh money into TIPS. The yield is extremely low (actually negative on 5-year TIPS).

http://www.bloomberg.com/markets/rates-bonds/government-bond...

Also, many believe that the government is deliberately understating inflation to reduce its payments on many obligations, including TIPS.

Treasuries are also less safe than alternatives for small investors seeking the safety of government insurance.

http://stockcharts.com/freecharts/candleglance.html?$IRX,$US...

You would be better off getting a CD from Pentagon Federal Credit Union than a Treasury.
https://www.penfed.org/productsandrates/checkingandsavings/m...

First, the interest rates are higher on most maturities.

Second, your principal is not at risk with a CD. Your principal IS at risk with a Treasury, since the value of the bond will decline if interest rates rise (as often happens in an economic recovery).

If you buy Treasuries, you are basically betting that the economy will get worse. (You will get your entire principal back if you hold the bond to maturity, even if interest rates rise. If you bought into a bond fund instead of an individual bond, your fund's NAV would drop and you would not recover your principal, since bond funds do not have a maturity.)

Please read the Bond Board FAQs before investing.

Wendy
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement