Personal Finance & Money Stack Exchange
Personal Finance & Money Stack Exchange

Questions tagged [tips]

TIPS are "Inflation-Protected Securities" offered by the United States Treasury.

TIPS are Inflation Protected Securities offered by the United States Treasury.

They are a kind of bond, and pay interest, but their value is adjusted for inflation by the officially published Consumer Price Index (CPI). Like all bonds, they are subject to interest-rate risk if they are sold before their maturity date.

Besides being available for purchase from the US Treasury, there are several bond ETFs and mutual funds which invest in TIPS. (These bond funds will always be subject to interest-rate risk because they continually reinvest their holdings.)

TIPS may be appropriate securities for people who need to live off their savings (e.g. people in retirement) and who need to protect themselves against any unexpected increase in the cost of living, and cannot afford to expose themselves to losses.

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How much in inflation protected securities (TIPS) should I buy?

I'm wondering whether it's worthwhile to allocate some of my bond portfolio in the Vanguard TIPS fund. I plan to work until about 2040, and I prefer (efficient) risk over return. I plan to buy and hold for the very long term. What do I need to…
glenviewjeff
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Is the US market really expecting less than 3% yearly inflation over the next 5 years?

Several people in my family are fearful of upcoming high inflation, perhaps due to the relatively high US inflation figures reported in the last few months (8%+). They think that the US inflation rate will be about 8% for the next few years. This…
Flux
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Where do I-Bonds fit into personal finance plans?

I'm mainly interested in a finding a medium-term, low risk savings vessel. Bank and Credit Union savings accounts available to me at the moment are all < 1% APY, so inflation-protected securities are attractive to me right now. First of all, it…
Dacio
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Comparing Treasury Inflation Protected Securities (TIPS) vs Certificates of Deposit

I was wondering what the pros and cons are of choosing one versus the other. There are TIPS that seem to have a better yield than CDs and would therefore make for better places to park savings.
David in Dakota
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How does TIPS perform during the recent inflation period in the US?

I'm reading The Permanent Portfolio and there's one paragraph talks about TIPS. It claims the TIPS is never put under pressure, and it's like buying fire insurance from an arsonist, quote: TIPS have only been available in the United States since…
daisy
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Buying Large Amounts of Inflation-Protected Treasuries (TIPS)

We are selling our current property, and will be renting in the short term while looking for a property to purchase. We have some equity in the current property, so will get a payout at closing. To pick a round number, let's call this payout…
Phil Sandler
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Where are the prices of secondary market TIPS trades?

The primary market prices for Treasury Inflation-Protected Securities (TIPS) can be found on TreasuryDirect's Auction Results webpage. But where can I find the prices for secondary market trades? Does the US Department of the Treasury publish…
Flux
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If TIPS yields are negative, why do TIPS ETFs have a positive yield?

I've heard that TIPs currently have a negative yield. But the VTIP ETF from Vanguard has a positive yield of about 1.2% right now. Why is that?
John
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Does the yield spread between inflation-indexed bonds and regular bonds overestimate inflation expectations?

Inflation expectations can be determined from the yield spread between inflation-indexed bonds and non-inflation-indexed bonds. For example, US inflation expectations for the next 5 years can be determined from the yield spread between 5-year…
Flux
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Why is VTIP not tracking inflation?

A while back I moved a portion of my wealth into inflation protected bonds as I needed a store of value that could preserve my purchasing power through the current high rates of inflation we were seeing. I ended up buying VTIP, the Vanguard ETF with…
David Karam
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How can TIPS have negative real yields?

In this Investopedia explainer about TIPS, it says: The yields on TIPS are often negative. This is because after taking into account the effects of inflation, the real yield is negative. For instance, if standard two-year Treasuries yield 1% but…
SuperElectric
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REITs vs I Bonds For Diversifying Beginner Portfolio Against Inflation

In the Intelligent Investor, Benjamin Graham recommends diversifying one's portfolio by hedging against inflation. In the book, he mentions REITs/real estate investments and investing in gold. I read the book a couple years ago and it has recently…
Cozy
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Market risk for TIPs vs. I Bonds

Treasury Direct has a good comparison between TIPs and I Bonds: https://www.treasurydirect.gov/indiv/products/prod_tipsvsibonds.htm However, I want to make sure I understand when you can lose principal. With TIPs, you're only able to buy them on…
public wireless
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Why does the price of a TIPS bond not match the inflation adjusted principal near or at maturity?

As stated by the US Treasury: With a rise in the index, or inflation, the principal increases. With a fall in the index, or deflation, the principal decreases. I'm curious why a TIPS (912828QV5) bond maturing on 07/15/2021 (in 2 months) is priced…
Ilya Scharrenbroich
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Example TIPS and how inflation rate affects its principal

Taken from here. Say the Treasury issues an inflation-protected security with a $1,000 face value and a 3 percent coupon. In the first year, the investor receives $30 in two semiannual payments. That year, the CPI increases by 4 percent. As a…
jed
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