Skip to main content
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.

http://www.martincapital.com/chart-pgs/Pg_mmnry.htm

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.

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.
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.