The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Bonds & Fixed Income Investments


Subject:  Re: 3.06% rate for tax-deferred I-Bonds Date:  1/25/2012  11:39 AM
Author:  ziggy29 Number:  33613 of 37043

>> This is why I bonds hold their value in an exceptionally low interest rate environment (like now). TIPS are not as good, and TIPS funds are only good if you think that Treasury interest rates will not rise. (That will happen if the U.S. enters a lonnnngggg deflationary recession, like Japan's. If and when the economy recovers, Treasury rates will rise.) <<

I would tend to agree in most typical situations, but I don't think this is always true. In October 2008, with asset values of almost everything melting down, TIPS were commonly priced to yield close to 3% at a time when the fixed rate on new I bonds was zero. In that scenario I would say TIPS were a much better choice for new money.

Copyright 1996-2021 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us