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Re: Tips vs. I bonds
Old 11-04-2004, 03:47 PM   #21
Recycles dryer sheets
Join Date: Dec 2003
Posts: 456
Re: Tips vs. I bonds

TH, I don't argue with your observations on volatility vs long term returns. My only point is that there can be good reasons to hold TIPS in a tax sheltered account.

In my own case, about 20% of my portfolio is in TIPS, with present coupon-plus-inflation yields ranging between 3% and 6%. I would much rather shelter that income in an IRA than the ~1% dividend yield of an S+P mutual fund. And, of course, I also got the pretax advantage of the IRA contribution when I bought the TIPS in the first place.

Sure, if the equities in question were high yield dividend stocks, the picture would change - hence my comment that it all depends on circumstances.



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