I am unclear about a few things concerning tips and I Bonds.
First of all: Do you receive any money in interest prior to maturity, or is it only when you cash in the bond or when it matures that you receive the interest?
Is this how it works. Suppose you have $100,000 in TIPS paying 1.80% interest with a 5.5% inflation rate. At the end of the first 6 months. Is that combined 7.3% credited to your account. Then say the next six months the posted inflation rate drops to 4.5%. Are you then credited 6.3%. Etcl, etc. until your maturity?
Do I bonds work the same way?
First of all: Do you receive any money in interest prior to maturity, or is it only when you cash in the bond or when it matures that you receive the interest?
Is this how it works. Suppose you have $100,000 in TIPS paying 1.80% interest with a 5.5% inflation rate. At the end of the first 6 months. Is that combined 7.3% credited to your account. Then say the next six months the posted inflation rate drops to 4.5%. Are you then credited 6.3%. Etcl, etc. until your maturity?
Do I bonds work the same way?