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What Alec says about the taxability of the interest and price appreciation on TIPs is true. However, it is not likely to be that much of a problem for people owning individual TIPs if they have a substantial amount (say, $20,000 or more) invested in them.
TIPs are issued in $1,000 denominations and have good liquidity; thus, if a person owns them directly they can sell them individually when they need cash.
As good an investment as TIPs are, I have a strong impression that brokerage firms are not eager to recommend them. Could this be the case because the sales commissions on government securities are not very high?
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