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HW \"Skip\" Weldon
Guest
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 Posted:
Fri Nov 04, 2005 5:01 pm Post subject:
TIPS vs I Bonds |
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The following post was mistakenly returned to the poster. With
apologies, here is the post in its entirety.
Begin copy---------------------------
Subject: Re: TIPS vs I Bonds
From: Rich Carreiro <rlcarr@animato.arlington.ma.us>
"Mike Schumann" <mike-nospam@traditions-nospam.com> writes:
| Quote: | How do the current interest rates compare between I Bonds and TIPS?
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I-Bonds issued from now to 30 April 2006 will carry an interest rate
of inflation + 1% for their entire lives.
You'll have to look to the bond market listings to see what TIPS base
rates are. And then you'll have to figure out how to account for the
market premium/discount. For example, I believe the TIPS that
were just (or are about to be) auctioned off pay inflation + 1.2%, for
their entire lives, but the market is free to push the price of the
bonds up or down in accordance with prevailing interest rates.
That makes it hard to figure out what the return on TIPS are, since
you have to look at the base rate, the market discount or premium,
make assumptions about what inflation will do from now to maturity,
and then combine all of that into an estimated yield to maturity
figure.
--
Rich Carreiro
rlcarr@animato.arlington.ma.us
End copy------------------------------
-HW "Skip" Weldon
Columbia, SC
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Octogenarian
Guest
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| Posted:
Thu Nov 10, 2005 1:01 am Post subject:
Re: TIPS vs I Bonds |
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Rate is 6.7% for i-bond vs TIPS (symbol TIP) that has lost principle
for the past 6 months.
Ideal to buy and hold i-bonds in tax deferred acccounts. |
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Guest
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| Posted:
Thu Nov 10, 2005 1:01 am Post subject:
Re: TIPS vs I Bonds |
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Why are I-bonds ideal for tax deferred accounts? You can defer the taxes on
them regardless.
"Octogenarian" <jimg2k@yahoo.com> wrote in message
news:1131579042.725428.146620@g44g2000cwa.googlegroups.com...
| Quote: | Rate is 6.7% for i-bond vs TIPS (symbol TIP) that has lost principle
for the past 6 months.
Ideal to buy and hold i-bonds in tax deferred acccounts.
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Rich Carreiro
Guest
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| Posted:
Thu Nov 10, 2005 7:39 am Post subject:
Re: TIPS vs I Bonds |
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"Octogenarian" <jimg2k@yahoo.com> writes:
| Quote: | Ideal to buy and hold i-bonds in tax deferred acccounts.
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How do you plan to get I-Bonds (which are savings bonds)
into a tax-deferred account?
--
Rich Carreiro rlcarr@animato.arlington.ma.us |
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Octogenarian
Guest
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| Posted:
Fri Nov 11, 2005 12:36 am Post subject:
Re: TIPS vs I Bonds |
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True, but who would'nt plan to cash them in after 5 years when newer
i-bond yields are trending higher? |
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Guest
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| Posted:
Fri Nov 11, 2005 3:54 pm Post subject:
Re: TIPS vs I Bonds |
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Maybe I'm incorrect, but I believe existing I-bonds have their rates
adjusted every six months based on the CPI. Otherwise, there wouldn't be
much of a point to them. If the inflation rate continues to increase then
the yield on the bonds you're already holding will increase. That's how
they protect the holder from the buying power erosion of inflation. If they
remained at a fixed rate they would be no different than a CD for example.
"Octogenarian" <jimg2k@yahoo.com> wrote in message
news:1131647776.033127.165500@g49g2000cwa.googlegroups.com...
| Quote: | True, but who would'nt plan to cash them in after 5 years when newer
i-bond yields are trending higher?
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Guest
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| Posted:
Fri Nov 11, 2005 5:01 pm Post subject:
Re: TIPS vs I Bonds |
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<nowhere@noplace.com> writes:
| Quote: | "Octogenarian" <jimg2k@yahoo.com> wrote in message
news:1131647776.033127.165500@g49g2000cwa.googlegroups.com...
True, but who would'nt plan to cash them in after 5 years when newer
i-bond yields are trending higher?
Maybe I'm incorrect, but I believe existing I-bonds have their rates
adjusted every six months based on the CPI. Otherwise, there wouldn't be
much of a point to them. If the inflation rate continues to increase then
|
Read this page:
http://www.savingsbonds.gov/indiv/research/indepth/ibonds/res_i_rates.htm
In particular:
The I Bond earns interest based on a composite rate consisting of:
* A fixed rate for the life of the bond and;
* An inflation rate that changes twice a year.
Every six months, the "fixed rate" for bonds that
will be issued for those following six months is something
new. All iBonds - old and new - get the same inflation
rate component, but the fixed rate for life - that is fixed
on the day you buy your iBond and right now, that fixed rate
is a rather pitiful 1.00%. It's been as high as 3.6% (back
in 2000) - and while iBonds issued today are yielding 6.73%
for the next six months (until the next inflation rate
adjustment), iBonds issued in 2000 are yielding 9.4%.
Seriously, read the page referenced above, plus the following:
http://www.publicdebt.treas.gov/sav/sbirate2.htm
--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting |
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