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Old 06-07-2012, 05:59 AM   #21
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We still hold on to our Vanguard TIPS fund.
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Old 06-07-2012, 06:02 AM   #22
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Originally Posted by Hiredgun View Post
as they currently have a negative yield?

I'm thinking of dumping my TIPS in my 401K and switching to stocks. Thoughts?
Why stocks? Would that change your allocation mix?
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Old 06-07-2012, 07:17 AM   #23
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A TIPS fund has been part of my allocation for a long time. The current rates are terrible, but they just keep going up in price......nice returns so far this year, can't say that for my equity index funds after the last month. Given the state of the world I don't see a reason to sell TIPS as I think people will keep pouring more money into them as a safe harbor.
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Old 06-07-2012, 10:13 AM   #24
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I don't see why you need a destination for funds taken out of TIPS. Cash at 0% is better than TIPS at -x%.

As to the possibility of continuing capital growth, perhaps, but where might it end?

Overall, good decisions are rewarded over time.

Ha
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Old 06-07-2012, 11:24 AM   #25
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I don't see why you need a destination for funds taken out of TIPS. Cash at 0% is better than TIPS at -x%.

As to the possibility of continuing capital growth, perhaps, but where might it end?

Overall, good decisions are rewarded over time.

Ha
I would say that cash will give you -3% right now still I have cash even if it does loose me 3% a year. My TIPs fund is for some inflation protection and is up around 5% so far this year.
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Old 06-07-2012, 01:17 PM   #26
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I don't see why you need a destination for funds taken out of TIPS. Cash at 0% is better than TIPS at -x%.
IF TIPs go down -x%, that's a big IF.

TJ
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Old 06-07-2012, 02:26 PM   #27
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IF TIPs go down -x%, that's a big IF.

TJ
TIPS offer a real yield of -x%, that is what I was referring to.

I didn't bother to look up the value of x for various maturities; I'll leave that to those who think this is a good investment.

Me, I am glad I noticed this thread and dumped the remainder of this #@%&)& while I could.

Are your TIPS quoted > 100? If so, you will have capital regression to 100 at maturity.

Ha
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Old 06-07-2012, 02:34 PM   #28
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Are your TIPS quoted > 100? If so, you will have capital regression to 100 at maturity.
Holding the actual bonds: an argument could be made for them if an investor wants to be sure of matching the rate of inflation (minus the -x%) over some coming timeframe. TIPS are an investment that will do that. And if there's some very largescale calamity that causes a "rush to quality" (US Bonds) and big fears about inflation (something lacking during the last crisis), then the price of individual TIPS might get bid up quite a bit.

That's not a bet I'm making, but I could understand the rationale.
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Old 06-07-2012, 03:13 PM   #29
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I think buying the Vanguard fund would be like buying most any bond fund, the nav is just way too expensive. I wouldn't buy from Treasury Direct because I'm not sure how to in my roll over IRA or Roth. I've read about TIPS many times and kind of get it but I really don't understand them clearly, I need to talk to someone that can explain as I ask questions. As they say never buy any investment that you do not understand. The trick was to buy the fund years ago and you'd have all the capital appreciation.
Veremchuka, Im pretty certain Treasury Direct does not get involved with IRAs. You could start buying IBonds though the limit is small (10k a year, plus 5k through income tax filing). If you have substantial assets may not be worth your time, but for small players like me its essentially a TIPS bond with a zero floor instead of negative one. Plus interest accrues tax deferred, state income tax exempted.
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Old 06-07-2012, 03:17 PM   #30
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Holding the actual bonds: an argument could be made for them if an investor wants to be sure of matching the rate of inflation (minus the -x%) over some coming timeframe. TIPS are an investment that will do that. And if there's some very largescale calamity that causes a "rush to quality" (US Bonds) and big fears about inflation (something lacking during the last crisis), then the price of individual TIPS might get bid up quite a bit.

That's not a bet I'm making, but I could understand the rationale.
There is always a rationale for bets, but these pure speculations on dear assets becoming more dear usually do not work out. By definition what yu are describing is a speculation, and one that requires the several conditions that you detail to possibly work.

I have nothing against speculating, just not in a case like this.

Ha
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Old 06-07-2012, 07:06 PM   #31
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I know the base rate for current TIPS are negative. But I believe they also carry an inflation adder. Does anyone know the current inflation adder to the TIPS? Vanguard is still sending me a dividend every quarter for the TIPS fund, so I think something is being overlooked?
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Old 06-07-2012, 07:47 PM   #32
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I know the base rate for current TIPS are negative. But I believe they also carry an inflation adder. Does anyone know the current inflation adder to the TIPS? Vanguard is still sending me a dividend every quarter for the TIPS fund, so I think something is being overlooked?
Yes, you are correct. That is why I said "real return is negative".
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Old 06-08-2012, 01:19 AM   #33
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Just dumped mine today. Thinking about going US Total Market or maybe a dividend ETF. It's in 401K so the last $$$ I will touch and good place for growth.

I'll keep my total bond fund for asset allocation but I'm tempted to sell that as well. Returns are abysmal in fixed income.

Loving my REITS though. Have held them for last 6 years.
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Old 06-08-2012, 01:56 PM   #34
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I dumped my TIPS fund years back before the bottom fell out of them. I bought VBRIX (VG short Term Bond Index Fund Adm) and I also have been buying IBonds since then.
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Old 06-08-2012, 02:24 PM   #35
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I dumped my TIPS fund years back before the bottom fell out of them.
I don't know what you mean by this. TIPS have been a rocket in recent years, going from fair value to overvalue to gross overvalue along with other long duration treasuries. The income may not be much, but if luck stays with TIPS holders, they have done fine on capital gains.

Not my kind of investment, but someone must like them.

Ha
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Old 06-09-2012, 02:49 PM   #36
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Veremchuka, Im pretty certain Treasury Direct does not get involved with IRAs. You could start buying IBonds though the limit is small (10k a year, plus 5k through income tax filing). If you have substantial assets may not be worth your time, but for small players like me its essentially a TIPS bond with a zero floor instead of negative one. Plus interest accrues tax deferred, state income tax exempted.
Thank you.

You are correct, TD won't allow me to buy TIPS in my rollover or Roth IRA. That leaves a taxable account and that's exactly where you do not want to hold TIPS, they should be held in a tax advantaged account because they are very tax inefficient.

IBonds are best held in a taxable account but I have 99% of my portfolio in my 401k, rollover IRA and Roth IRA.
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Old 06-09-2012, 05:18 PM   #37
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TIPS funds work very nicely in an IRA or 401K. VIPSX has been going up very nicely for the past few years and are taxed the same as any other fund when you withdraw them. I don't see what the issue is with these.
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Old 06-09-2012, 08:36 PM   #38
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Well, you all are making me feel better about not having any TIPS.
We've never bought any either, and we're liquidating the I bonds in the college fund.

Our current best-performing asset class is the iShares Dow dividend fund (DVY).
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