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Treasurydirect Account Auth form
Old 03-20-2010, 03:53 PM   #1
Confused about dryer sheets
 
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Treasurydirect Account Auth form

I want to buy TIPS so I opened a TD account. To my surprise, I have to fill out an authorization form and send it to the fed.

I'm confused about the auth form. From what I read, I would have to bring this form to some kind of institution in order to get it filled out? huh?
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Old 03-20-2010, 04:14 PM   #2
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I don't have an answer to your question about the authorization form. But I want to mention a couple of related things.

First, you can purchase TIPs through a brokerage firm. I've bought them through both Vanguard and ETrade, and I'm sure most other brokerage firms can purchase them for you as well. No special paperwork required.

Second, have you considered buying them in a retirement account instead? It's more tax-efficient to keep TIPs in a retirement account because in a taxable account you are taxed on the "phantom" income (inflation-adjustment portion) of income each year, even though you don't receive that until the bond matures. If you want to own TIPs in a non-retirement account, you might want to consider purchasing shares in a TIPs fund (like TIP or VIPSX). When you own shares of a fund, at least you receive the inflation adjustment you're being taxed on.
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Old 03-20-2010, 04:18 PM   #3
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Yes you take the form to your bank and ask for a signature guarantee. We just did this for my wife.
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Old 03-20-2010, 06:06 PM   #4
Confused about dryer sheets
 
Join Date: Mar 2010
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Quote:
Originally Posted by ksr View Post
I don't have an answer to your question about the authorization form. But I want to mention a couple of related things.

First, you can purchase TIPs through a brokerage firm. I've bought them through both Vanguard and ETrade, and I'm sure most other brokerage firms can purchase them for you as well. No special paperwork required.

Second, have you considered buying them in a retirement account instead? It's more tax-efficient to keep TIPs in a retirement account because in a taxable account you are taxed on the "phantom" income (inflation-adjustment portion) of income each year, even though you don't receive that until the bond matures. If you want to own TIPs in a non-retirement account, you might want to consider purchasing shares in a TIPs fund (like TIP or VIPSX). When you own shares of a fund, at least you receive the inflation adjustment you're being taxed on.

Does it make any sense to eliminate interest rate risk by buying individual bonds instead of a bond fund? Since interest rate is so low right now, I want to buy a bond and hold it to maturity to avoid principle loss. Because interest rate is currently at a historic low, is principle loss a guarantee if I buy a bond fund?

I'm still a newbie investor so please advise .
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Old 03-21-2010, 12:50 PM   #5
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Quote:
Originally Posted by david90 View Post
Does it make any sense to eliminate interest rate risk by buying individual bonds instead of a bond fund? Since interest rate is so low right now, I want to buy a bond and hold it to maturity to avoid principle loss. Because interest rate is currently at a historic low, is principle loss a guarantee if I buy a bond fund?

I'm still a newbie investor so please advise .
Yes, that does make sense to me. I own some TIPs that I plan to hold to maturity as well. But I hold them in a retirement account so I'm not being taxed on the income.

If you hold them in a taxable account, income will be reported to you each year for both the interest you are paid and the accrued inflation adjustment that you don't receive until maturity. Do you have a place for them in your retirement account?
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Old 03-21-2010, 01:34 PM   #6
Confused about dryer sheets
 
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Originally Posted by ksr View Post
Yes, that does make sense to me. I own some TIPs that I plan to hold to maturity as well. But I hold them in a retirement account so I'm not being taxed on the income.

If you hold them in a taxable account, income will be reported to you each year for both the interest you are paid and the accrued inflation adjustment that you don't receive until maturity. Do you have a place for them in your retirement account?
No I currently don't have a retirement account but I'm aware of the benefits of having one.
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Old 03-24-2010, 04:43 PM   #7
Confused about dryer sheets
 
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Is it a problem to have multiple roth IRA wit different online broker?
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