The basic problem with I-bonds is the fixed component of 1.4% is so far below market rates (compare to about 2.4% on TIPS) the delay on federal income tax will not make up for the low rate under any but extreme circumstances. A not-so-extreme exception to this is if you plan to use the I-bonds for educational purposes, in which case the interest may be tax-free. TIPS don't have this provision.http://www.irs.gov/publications/p970/ch10.htmlI think this may go a long way toward explaining the rate gap.dan
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