Early Retirement & Financial Independence Community - View Single Post

11-20-2003, 06:06 AM

I have read about TIPS but have not invested in them to date. It seems many people look at them as a crucial part of their portfolio, but I wonder if you or others could give me your thoughts on whether this is a good time to purchase the new 10-year TIP offerings (January) - 5-Year TIPS are no longer available. I would probably purchase them from TreasuryDirect to avoid any commissions/fees; I also understand the cost to sell them before maturity is about $34, which may be competitive. My question relates to the need to sell the TIPS before the 10-year maturity, and what the liklihood would be that this would result in a loss of principal. In other words, what is the real-world experience in selling before maturity.

The other issue is the currently low interest rates. Would it be better to spread out the purchases, or if interest rates rise could you sell the current TIP and re-invest at the higher rate? This is probably where the principal value is impacted on sales before maturity, but I am interested in hearing from others with practical experience.

11-20-2003, 06:06 AM	#9
adviceseeker Guest Posts: n/a	I have read about TIPS but have not invested in them to date. It seems many people look at them as a crucial part of their portfolio, but I wonder if you or others could give me your thoughts on whether this is a good time to purchase the new 10-year TIP offerings (January) - 5-Year TIPS are no longer available. I would probably purchase them from TreasuryDirect to avoid any commissions/fees; I also understand the cost to sell them before maturity is about $34, which may be competitive. My question relates to the need to sell the TIPS before the 10-year maturity, and what the liklihood would be that this would result in a loss of principal. In other words, what is the real-world experience in selling before maturity. The other issue is the currently low interest rates. Would it be better to spread out the purchases, or if interest rates rise could you sell the current TIP and re-invest at the higher rate? This is probably where the principal value is impacted on sales before maturity, but I am interested in hearing from others with practical experience.