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No. of Recommendations: 6
<Basically - if rates go up, but inflation does not go up, these TIPS positions get slaughtered. >

And that was the great advantage of I-Bonds over TIPS in a pre-rising interest rate environment, such as 2001-2004. I-Bonds never lose value, while TIPS do lose value when interest rates rise. Too bad that Treasury cut the amount that can be invested in I-Bonds!

I plan to hold all my TIPS to maturity. Here is my TIPS ladder, with YTM (plus inflation, of course). They were bought over quite a long time, not just during the crisis.

5.76% 01/15/10
5.760% 1/15/10
5.760% 01/15/10
6.090% 4/15/10
6.300% 04/15/10
6.300% 04/15/10
5.110% 1/15/11
2.379% 4/26/11
2.379% 4/26/11
2.691% 4/26/11
4.22% 7/15/12
3.720% 07/15/15
3.57% 07/15/15
2.41% 4/15/16
2.41% 4/15/16
2.960% 1/15/17
2.749% 7/15/17
2.960% 7/15/17
2.749% 7/15/17
2.960% 7/15/18

These TIPS have rates that are comparable to or better than the average real rate of the Treasury bonds....and they will be better if inflation spikes.

I do think that inflation will rise higher than the market implied rate. But I still would have bought I-Bonds instead, if they had been available in the same yields and in adequate quantity.

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