Anyone Buying 5 Year Tips Next Week?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
MishkaWorries
Posts: 835
Joined: Wed Aug 14, 2019 4:39 pm

Anyone Buying 5 Year Tips Next Week?

Post by MishkaWorries »

We have a large part of our savings in bonds and cash or equivalent. I've been thinking we need some inflation protection above our I-bonds.

I chickened out last month and didn't buy any of the reissued 10 year Tips.

Does the new inflation numbers make Tips more or less attractive?
Last edited by MishkaWorries on Fri Apr 16, 2021 8:30 am, edited 1 time in total.
We plan. G-d laughs.
mfFrom35k
Posts: 7
Joined: Mon Sep 21, 2020 6:24 am

Re: Anyone Buying 5 Year Tips Next Week?

Post by mfFrom35k »

I am buying although it will be very painful to pull the trigger to pay the premium.

It is the last rung of my 10 year ladder to social security. Need a final 5 year purchase of TIPS to fill it up. Have gone 50/50 between TIPS and combination of CDs, STRIPS and 10 Year Treasury Bonds.

I don't have any idea what inflation or interest rates will do going forward; so I am continuing with my LMP plan. After social security starts it is ibonds and EE bonds on top of social security and RMDs. At least with the ibonds and EE bonds there is no painful premium.

On the other hand I have been filling up the ladder for the last 7 or 8 years and nearly all the earlier purchases look really good right now with even a 4% APY in there (thank you, Sharonview Federal Credit Union). Would have wanted more of those 4% APY certificates but I didn't know rates wouldn't be going up more then. That's the whole point: one never knows. And its worked out overall.

So all good.

:sharebeer
User avatar
Wiggums
Posts: 3753
Joined: Thu Jan 31, 2019 8:02 am

Re: Anyone Buying 5 Year Tips Next Week?

Post by Wiggums »

We are all complaining about the rates, but it did not prevent me from buying more fixed income. Sticking to ones well thought out plan is (usually) better than changing strategies due to last minute decisions.
Topic Author
MishkaWorries
Posts: 835
Joined: Wed Aug 14, 2019 4:39 pm

Re: Anyone Buying 5 Year Tips Next Week?

Post by MishkaWorries »

mfFrom35k wrote: Fri Apr 16, 2021 5:53 am I am buying although it will be very painful to pull the trigger to pay the premium.

It is the last rung of my 10 year ladder to social security. Need a final 5 year purchase of TIPS to fill it up. Have gone 50/50 between TIPS and combination of CDs, STRIPS and 10 Year Treasury Bonds.

I don't have any idea what inflation or interest rates will do going forward; so I am continuing with my LMP plan. After social security starts it is ibonds and EE bonds on top of social security and RMDs. At least with the ibonds and EE bonds there is no painful premium.

On the other hand I have been filling up the ladder for the last 7 or 8 years and nearly all the earlier purchases look really good right now with even a 4% APY in there (thank you, Sharonview Federal Credit Union). Would have wanted more of those 4% APY certificates but I didn't know rates wouldn't be going up more then. That's the whole point: one never knows. And its worked out overall.

So all good.

:sharebeer
That's my thought too. I think I need to add some Tips every year between retirement and beging SS. Five years works out for that strategy. I'm just don't like paying that big of a premium for a possible negative return.

We have I-bonds, 4% paying stable value fund and CDs to pay pre-social security expenses. Intellectually 1/4 I-bonds, 1/4 Tips and 1/2 cash makes sense to me.

I'm just letting emotions get in the way.
We plan. G-d laughs.
Topic Author
MishkaWorries
Posts: 835
Joined: Wed Aug 14, 2019 4:39 pm

Re: Anyone Buying 5 Year Tips Next Week?

Post by MishkaWorries »

Wiggums wrote: Fri Apr 16, 2021 7:02 am We are all complaining about the rates, but it did not prevent me from buying more fixed income. Sticking to ones well thought out plan is (usually) better than changing strategies due to last minute decisions.
Agreed. I need to get over the emotional aspects. Who would thought fixed income portion would be so much turmoil :shock:
We plan. G-d laughs.
Topic Author
MishkaWorries
Posts: 835
Joined: Wed Aug 14, 2019 4:39 pm

Re: Anyone Buying 5 Year Tips Next Week (April 22)?

Post by MishkaWorries »

Well the die is caste. I held my nose and put in the order for the 5 year Tips.

We already maxed out I-bonds so I rationalized it by thinking of Tips as insurance. We use intermediate treasury as our bond fund and we're sitting on a bunch of cash we'll use in the next few years. So we do need some protection from unexpected inflation and $10,000 per year in I-bonds just doesn't cut it.
We plan. G-d laughs.
User avatar
Gundy
Posts: 23
Joined: Tue Dec 15, 2020 4:08 pm

Re: Anyone Buying 5 Year Tips Next Week?

Post by Gundy »

Yes. I placed an order for $15k
I'm a man! I'm 40!
jimkinny
Posts: 1581
Joined: Sun Mar 14, 2010 1:51 pm

Re: Anyone Buying 5 Year Tips Next Week?

Post by jimkinny »

OP, just in case you don't know, the Treasury yield curve rate shows a -1.73% yield for the 5 year TIPS. Someone posted on this website recently that an I bond is at 0%. This not something to be happy about but better than a negative 1.73%.
Topic Author
MishkaWorries
Posts: 835
Joined: Wed Aug 14, 2019 4:39 pm

Re: Anyone Buying 5 Year Tips Next Week?

Post by MishkaWorries »

jimkinny wrote: Mon Apr 19, 2021 12:57 pm OP, just in case you don't know, the Treasury yield curve rate shows a -1.73% yield for the 5 year TIPS. Someone posted on this website recently that an I bond is at 0%. This not something to be happy about but better than a negative 1.73%.
I know about the -1.73% and it may get worse at auction :(

But we've maxed our I-bonds and I still want a little more inflation protection since we use intermediate treasury as our bond fund and we're building up cash for retirement in 2-4 years.
We plan. G-d laughs.
Post Reply