Comments on: 10-year TIPS available Thursday, October 11 http://www.savings-bond-advisor.com/10-year-tips-available-thursday-october-11-2/ Thu, 04 Dec 2008 00:53:43 +0000 http://wordpress.org/?v=2.0.4 by: Tom Adams http://www.savings-bond-advisor.com/10-year-tips-available-thursday-october-11-2/#comment-11720 Thu, 11 Oct 2007 14:59:41 +0000 http://www.savings-bond-advisor.com/10-year-tips-available-thursday-october-11-2/#comment-11720 Hi Dale - it's more complicated that than. First, if you want to compare rates, just compare the fixed rate portions of TIPS and I bonds - both earn the same CPI rate on top of that. The I bond fixed rate is currently 1.3%, the TIPS rate won't be known until after the auction, but will likely be at least 1 percentage point above that. As for taxes, with TIPS the 1099-INT you get each year includes both the interest payments and the CPI adjustments. You also need to be aware that if you need to redeem before the TIPS matures, you can get back less than you invested. When interest rates go up, TIPS values go down, and vice-versa. I bond values never go down. Tom Adams Hi Dale - it's more complicated that than. First, if you want to compare rates, just compare the fixed rate portions of TIPS and I bonds - both earn the same CPI rate on top of that. The I bond fixed rate is currently 1.3%, the TIPS rate won't be known until after the auction, but will likely be at least 1 percentage point above that.

As for taxes, with TIPS the 1099-INT you get each year includes both the interest payments and the CPI adjustments.

You also need to be aware that if you need to redeem before the TIPS matures, you can get back less than you invested. When interest rates go up, TIPS values go down, and vice-versa. I bond values never go down.

Tom Adams

]]> by: Dale http://www.savings-bond-advisor.com/10-year-tips-available-thursday-october-11-2/#comment-11677 Thu, 11 Oct 2007 01:09:55 +0000 http://www.savings-bond-advisor.com/10-year-tips-available-thursday-october-11-2/#comment-11677 So the coupon interest rate is what you get periodically (and pay taxes upon now), and the yield that's on the treasury dot gov site is calculated from the price someone paid versus the final value of the bond? So does that mean I can simply add the two numbers together (2.625 + 2.33 = 4.955) to get what I might compare to the Series I bond (3.74)? So the coupon interest rate is what you get periodically (and pay taxes upon now), and the yield that's on the treasury dot gov site is calculated from the price someone paid versus the final value of the bond?

So does that mean I can simply add the two numbers together (2.625 + 2.33 = 4.955) to get what I might compare to the Series I bond (3.74)?

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