Comments on: 20-year TIPS auction yield is 2.42% http://www.savings-bond-advisor.com/20-year-tips-auction-yield-is-242/ Wed, 20 Aug 2008 11:42:35 +0000 http://wordpress.org/?v=2.0.4 by: Tom Adams http://www.savings-bond-advisor.com/20-year-tips-auction-yield-is-242/#comment-2070 Thu, 25 Jan 2007 16:18:31 +0000 http://www.savings-bond-advisor.com/20-year-tips-auction-yield-is-242/#comment-2070 Charles - there are no fees to use TreasuryDirect, so that's not the issue. TIPS have some complexities that most individual investors aren't comfortable with. The 20-year TIPS in particular are best avoided in favor of I bonds because their value is quite volatile. Twenty years of interest payments creates a lot of leverage so that when interest rates rise or fall 1 percentage point the effect on the value of a 20-year TIPS is well over 10% down or up. T-Bills are much more popular with individual investors. This week there was an auction of 26-week T-Bills and about 9% of the issue went to TreasuryDirect investors. Charles - there are no fees to use TreasuryDirect, so that's not the issue.

TIPS have some complexities that most individual investors aren't comfortable with. The 20-year TIPS in particular are best avoided in favor of I bonds because their value is quite volatile. Twenty years of interest payments creates a lot of leverage so that when interest rates rise or fall 1 percentage point the effect on the value of a 20-year TIPS is well over 10% down or up.

T-Bills are much more popular with individual investors. This week there was an auction of 26-week T-Bills and about 9% of the issue went to TreasuryDirect investors.

]]> by: Charles http://www.savings-bond-advisor.com/20-year-tips-auction-yield-is-242/#comment-2067 Thu, 25 Jan 2007 13:52:07 +0000 http://www.savings-bond-advisor.com/20-year-tips-auction-yield-is-242/#comment-2067 "about 2.5 hundredths of one percent of the total amount" Hi Tom, Sounds like a drop in a big bucket. It looks like the Treasurys administration fees for dealing with the small investor wouldn't be worth the trouble. Any idea of what percentages are generally purchased using TD for T Bills and shorter term bonds? "about 2.5 hundredths of one percent of the total amount"

Hi Tom,
Sounds like a drop in a big bucket. It looks like the Treasurys administration fees for dealing with the small investor wouldn't be worth the trouble. Any idea of what percentages are generally purchased using TD for T Bills and shorter term bonds?

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