Well, I just made a big step for me in my IRA
bond allocation.
I bought a floating rate CD on the secondary market
that matures on 6/03/2014. The price was 101.3.
After commission and accrued interest, the total
cost was $101,387.67.
The good news is that the "floater" pays 2% + CPI
or about 5.52% right now. The real rate on 10
year TIPS is about 1.7% ..... so I am happy!
This brings my TIPS equivalent to about 25% of my
IRA ..... same as Vanguard's Target Retirement
Income fund. I hope they have it right.
1.98% real yield is a damn sight better than the current
1.22% real that Vanguard is paying on their fund
for equivalent maturity.
I like the "floater" concept because it pays the interest
up front. Downside vs TIPS is that in 9 years at maturity my CD will have depreciated in real value.
Oh well, I like to eat dessert first!
Cheers,
Charlie