teejayevans
Thinks s/he gets paid by the post
- Joined
- Sep 7, 2006
- Messages
- 1,692
IF TIPs go down -x%, that's a big IF.I don't see why you need a destination for funds taken out of TIPS. Cash at 0% is better than TIPS at -x%.
TJ
IF TIPs go down -x%, that's a big IF.I don't see why you need a destination for funds taken out of TIPS. Cash at 0% is better than TIPS at -x%.
TIPS offer a real yield of -x%, that is what I was referring to.IF TIPs go down -x%, that's a big IF.
TJ
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.Are your TIPS quoted > 100? If so, you will have capital regression to 100 at maturity.
veremchuka said: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.
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.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.
Yes, you are correct. That is why I said "real return is negative".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?
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.I dumped my TIPS fund years back before the bottom fell out of them.
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.
We've never bought any either, and we're liquidating the I bonds in the college fund.Well, you all are making me feel better about not having any TIPS.