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TIPS coming due: what would you do?
Old 01-16-2012, 03:54 PM   #1
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TIPS coming due: what would you do?

My wife and I each have a 10 year TIPS (inside of a Vanguard brokerage IRA) maturing tomorrow. (The proceeds will automatically go into the Prime MMF which serves as the cash account within the brokerage account.) Not a huge amount of money but my inclination is to keep it on the fixed income side to maintain our AA. Given the current (crappy) interest rate environment, what would you do with it?

Particulars:
- unlikely to need the money for 5 years
- I'm considering Vanguard TIPS fund (to date I haven't owned it), Vanguard Total Bond or Short-Term Index funds, a credit union CD for a year.
- I-Bonds are also a possibility - I own a bunch of them - although I can't buy enough to use up all the money I'll get from the TIPS.

I don't suppose there are any great options right now, but just curious what others might have for advice.
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Old 01-16-2012, 06:08 PM   #2
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I would get five CDs, one at maturity = 5 years, one at 6, one at 7, one at 8 and the last one at 10 years.

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Originally Posted by friar1610 View Post
My wife and I each have a 10 year TIPS (inside of a Vanguard brokerage IRA) maturing tomorrow. (The proceeds will automatically go into the Prime MMF which serves as the cash account within the brokerage account.) Not a huge amount of money but my inclination is to keep it on the fixed income side to maintain our AA. Given the current (crappy) interest rate environment, what would you do with it?

Particulars:
- unlikely to need the money for 5 years
- I'm considering Vanguard TIPS fund (to date I haven't owned it), Vanguard Total Bond or Short-Term Index funds, a credit union CD for a year.
- I-Bonds are also a possibility - I own a bunch of them - although I can't buy enough to use up all the money I'll get from the TIPS.

I don't suppose there are any great options right now, but just curious what others might have for advice.
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Old 01-16-2012, 07:26 PM   #3
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Quote:
Originally Posted by obgyn65 View Post
I would get five CDs, one at maturity = 5 years, one at 6, one at 7, one at 8 and the last one at 10 years.
My first thought was "long & wrong", but with rates these low I guess the early-redemption penalties wouldn't amount to much.
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Old 01-17-2012, 01:45 PM   #4
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I just received my Kiplinger magazine, and it has a nice article on TIPS. The basic statement they make is that the rates are so low today that it doesn't pay to buy them....but it's really more of an educational article...explaining whether to buy them in funds vs. individual, various risks of owning, etc.
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Old 01-18-2012, 07:42 PM   #5
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Thanks for the thoughts. I'll mull it over for a few days and then probably make the decision which, down the road, will prove to be the wrong one.
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