Sun, Aug 31, 2014, 3:26 AM EDT - U.S. Markets closed


% | $
Quotes you view appear here for quick access.

iShares TIPS Bond Message Board

  • gsk10002000 gsk10002000 Feb 1, 2011 5:12 PM Flag

    The Problem with TIP is, no History during inflatonary period

    The problem with TIP is there is no long term track record of this vehicle.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • "The problem with TIP is there is no long term track record of this vehicle."

      Why would we care?

      1. You buy a 10-Year TIPS bond that pays 1.08% over inflation (the current rate).
      2. You hold until maturity.
      3. If inflation averages 3% then you will earn 4.08%.

      Historical performance would have no impact whatsoever on that math.

      If I am comfortable owning that bond then I should feel comfortable owning a bond fund that holds a collection of similar bonds (TIP).

      I actually prefer to buy TIPS directly and hold them until maturity though. That way I don't have to rely on the market to tell me what they are worth. I already know what they are worth to me.

      I bought a 29-Year TIPS bond for my IRA. It paid about 1.86% over inflation for the next 29 years. The market says I've lost money so far. That's fine. It won't change the fact that I will continue to earn 1.86% over inflation and that my IRA's purchasing power will grow by roughly 70% over the period though (thanks to 29 years of compound interest). All I am really missing is the opportunity to have done better. No big deal.

      In fact, I'm rooting for higher long-term TIPS yields (and lower prices). The 30-Year TIPS auction is coming up this month and I plan to participate in the auction.

115.25-0.11(-0.10%)Aug 29 4:00 PMEDT

Trending Tickers

Trending Tickers features significant U.S. stocks showing the most dramatic increase in user interest in Yahoo Finance in the previous hour over historic norms. The list is limited to those equities which trade at least 100,000 shares on an average day and have a market cap of more than $300 million.