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Income from TIPS?
Old 04-04-2007, 07:09 PM   #1
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Income from TIPS?

I've already retired.

If I transferred some of my IRA money to an IRA invested totally in individual TIPS, not a TIPS bond fund, how expensive is it typically to sell TIPS to get income above the coupons?

A better method might be to ladder a large number of TIPS and have one mature each year, I could decide to reinvest or take the cash once per year. But that means a purchase each year. If I'm buying $10k tips, the expenses might become significant.

My current IRA custodian wants to apply their expense ratio to any TIPS they hold for me, I ain't gonna do that. They are doing a good job otherwise and i don't want to drop them completely. Some places like Vanguard will buy/sell/hold TIPS for a very small fee, or no fee, but i don't want to transfer a lot of other money to them.

Suggestions?
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Re: Income from TIPS?
Old 04-04-2007, 09:11 PM   #2
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Re: Income from TIPS?

As I write this, the post has 51 views and no replys. That implies my questions are either so difficult that no one can answer them, or so dumb that you are all rolling on the floor in laughter.
Which is it?
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Re: Income from TIPS?
Old 04-04-2007, 09:33 PM   #3
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Re: Income from TIPS?

I think most people don't have a good answer. I recently sold a large TIPS position in order to buy ISM/OSM. Schwab charged me 30 basis points (.3%), which doesn't seem lot but ended up being over $300. Schwab, Vanguard, Fidelity and probably other all allow you to buy TIPs and other Treasuries at auction for free, so as long as your hold them to maturity you shouldn't be paying any money..

If you plan is to have a significant portion of your IRA in TIPs, I definitely would transfer it to a discount brokerage or Vanguard.
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Re: Income from TIPS?
Old 04-04-2007, 10:35 PM   #4
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Re: Income from TIPS?

Quote:
Originally Posted by Gearhead Jim
A better method might be to ladder a large number of TIPS and have one mature each year, I could decide to reinvest or take the cash once per year.
Here is a spreadsheet posted awhile back showing how this would work.
Supports inflation adjusted 4% initial SWR for over 30 years, using today's
2.375% coupon (butnot today's price premium :-(

Attached Files
File Type: pdf TIPS_ladder.pdf (18.8 KB, 19 views)
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Re: Income from TIPS?
Old 04-05-2007, 08:29 AM   #5
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Re: Income from TIPS?

Quote:
Originally Posted by Gearhead Jim
As I write this, the post has 51 views and no replys. That implies my questions are either so difficult that no one can answer them, or so dumb that you are all rolling on the floor in laughter.
Which is it?
I would know how to purchase a TIPs bond fund, but I would not know how to purchase individual TIPs. Reading to learn more than to contribute.
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Re: Income from TIPS?
Old 04-05-2007, 11:23 AM   #6
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Re: Income from TIPS?

Quote:
Originally Posted by Gearhead Jim
I've already retired.

If I transferred some of my IRA money to an IRA invested totally in individual TIPS, not a TIPS bond fund, how expensive is it typically to sell TIPS to get income above the coupons?

A better method might be to ladder a large number of TIPS and have one mature each year, I could decide to reinvest or take the cash once per year. But that means a purchase each year. If I'm buying $10k tips, the expenses might become significant.

My current IRA custodian wants to apply their expense ratio to any TIPS they hold for me, I ain't gonna do that. They are doing a good job otherwise and i don't want to drop them completely. Some places like Vanguard will buy/sell/hold TIPS for a very small fee, or no fee, but i don't want to transfer a lot of other money to them.

Suggestions?
Not a big TIPS believer..........sorry I can't help...........
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Re: Income from TIPS?
Old 04-05-2007, 03:52 PM   #7
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Re: Income from TIPS?

Vanguard commissions and fees can be found here:

https://flagship.vanguard.com/VGApp/...eesContent.jsp
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