Income oriented investors should be aware of these US Treasury derivatives.See the new Wiki article on them:http://wiki.fool.com/STRIPs
Aware as in this could be dangerous or aware as in this should be taken advantage of?JLC
Aware that these are available and can fit into some strategies. Charlie over on the Bond & Fixed Incomes board is convinced that with interest rates so low, its a terrible time to buy any fixed income.The TINTs should be high yield treasury investments. But people say they are very hard to find these days. When people buy STRIPs, the TINTs are easily sold, and not widely offered. Maybe even private placements. Probably very attractive to money market funds, pensions, insurance companies, etc, etc. Individuals rarely get a chance to buy them. But they do exist.
If the same product, 'Strips' used to be called 'Strip-T's', as the treasuries would have their interest payments 'stripped' and would be sold at a discount roughly equal to the present value of the interest stream over the maturity of the bond. The advantage of this approach is that the holder didn't have reinvestment risk, which can be an issue in a market of declining interest rates.Also, the minimums on these, as I recall, were usually in the hundreds of thousands or millions, so were pretty much for the institutionals.But at today's interest rates, I'd think hard before investing anything in fixed income...of ANY type.BruceM
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