{"id":1746268,"date":"2022-11-21T06:11:06","date_gmt":"2022-11-21T11:11:06","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1746268"},"modified":"2022-11-21T06:48:21","modified_gmt":"2022-11-21T11:48:21","slug":"tips-should-be-on-your-radar-to-hedge-against-inflation","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/tips-should-be-on-your-radar-to-hedge-against-inflation\/","title":{"rendered":"TIPS Should Be on Your Radar to Hedge Against Inflation"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">20<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Ftips-should-be-on-your-radar-to-hedge-against-inflation%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1746268&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>In all the hoopla to grab I bond\u2019s <a href=\"https:\/\/money.yahoo.com\/treasury-i-bond-rate-163920592.html\" data-ylk=\"slk:high rate;outcm:mb_qualified_link;_E:mb_qualified_link;ct:story;\" class=\"link  yahoo-link\">high rate<\/a> before it slid this month, <a href=\"https:\/\/treasurydirect.gov\/marketable-securities\/tips\/\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:Treasury inflation-protected securities\" class=\"link\">Treasury inflation-protected securities<\/a>, or TIPS, took a backseat for many inflation-spooked investors.<\/p>\n<p>But they\u2019re worth considering if you\u2019re looking for long-term inflation protection. TIPS are a type of Treasury security whose principal value is indexed to inflation. When inflation climbs, the TIPS&#8217; principal value is adjusted upward.<\/p>\n<p>That should appeal to investors who are considering purchasing I bonds, which combine a 6.48% annualized rate of inflation with a 0.40% fixed rate because TIPS is beating that right now.<\/p>\n<p>\u201cCurrently, TIPS have a larger real yield than I bonds,\u201d Ken Tumin, a senior industry analyst at LendingTree and founder of DepositAccounts.com, told Yahoo Money. \u201cThe I bonds real yield, the fixed rate, went up to 0.4% in November, but TIPS have <a href=\"https:\/\/fred.stlouisfed.org\/series\/DFII10\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:real yields\" class=\"link\">real yields<\/a> that have been in the range of 1.40% to 1.80%.\u201d<\/p>\n<p>Here\u2019s what to know.<\/p>\n<h2><strong>Pros of TIPS<\/strong><\/h2>\n<p>While I bonds certainly deserved the klieg light, TIPS can deliver more yield over the long run when consumer prices jump and are not as constricted in terms of how much you can buy, where to purchase, how long you must hold them, and what types of accounts they can be held in.<\/p>\n<p>These bonds are also issued by and backed by the United States Government.<\/p>\n<figure class=\"caas-figure\">\n<div class=\"caas-figure-with-pb\">\n<div>\n<div class=\"caas-img-container caas-img-loader\"><img class=\"caas-img caas-lazy has-preview\" alt=\"United States Treasury Department Building in Washington, DC\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/11\/36ce1fe0-8427-11e9-997d-dad01ebae1b6\" src \/><noscript><img decoding=\"async\" alt=\"United States Treasury Department Building in Washington, DC\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/11\/36ce1fe0-8427-11e9-997d-dad01ebae1b6\" class=\"caas-img\" \/><\/noscript><\/div>\n<\/div>\n<\/div>\n<p><figcaption class=\"caption-collapse\">(Getty Creative)<\/figcaption><\/p>\n<\/figure>\n<p>With I bonds, you\u2019re generally limited to purchasing $10,000 per calendar year. But with TIPS, an investor can buy as much as $10 million. This can make a huge difference for someone who wants to obtain a large degree of inflation protection.\u201d<\/p>\n<p>There are also more purchase options, as you can purchase TIPS directly from <a href=\"https:\/\/www.treasurydirect.gov\/marketable-securities\/tips\/\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:TreasuryDirect.go\" class=\"link\">TreasuryDirect.go<\/a>v, through a brokerage account, or via a dedicated mutual fund or ETF such as Fidelity Inflation-Protected Bond Index Fund (FIPDX) or T. Rowe Price Inflation Protected Bond Fund (PRIPX) or Goldman Sachs Access Inflation Protected US Bond ETF.<\/p>\n<p>With I bonds, you can only purchase them through <a href=\"https:\/\/www.treasurydirect.gov\/marketable-securities\/tips\/\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:TreasuryDirect.gov.\" class=\"link\">TreasuryDirect.gov.<\/a><\/p>\n<p>\u201cNot only can you buy TIPS from <a href=\"https:\/\/www.treasurydirect.gov\/marketable-securities\/tips\/\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:TreasuryDirect\" class=\"link\">TreasuryDirect<\/a>, but you can also buy TIPS from a brokerage firm,\u201d Tumin said. \u201cTIPS can be easily purchased inside retirement accounts such as IRAs, and TIPS can be bought indirectly through mutual funds and ETFs.\u201d<\/p>\n<p>You can&#8217;t buy I bonds within a traditional IRA, Roth IRA, or employer-sponsored savings plan, such as a 401(k) plan. So you&#8217;ll need to buy I bonds with savings outside of these programs.<\/p>\n<p>TIPS are sold for a term of 5, 10, or 30 years.TIPS&#8217; yields are based on their current amount of principal. When the Consumer Price Index for all Urban Consumers (CPI-U) rises, the principal of TIPS adjusts higher, and the payments move in step with it.<\/p>\n<p>So unlike I bonds, the principal of a TIPS can go up or down over its term. The rate is adjusted by using <a href=\"http:\/\/www.bls.gov\/news.release\/cpi.t01.htm\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:this version of the Consumer Price Index\" class=\"link\">this version of the Consumer Price Index<\/a> from the Bureau of Labor Statistics. You can check out <a href=\"https:\/\/treasurydirect.gov\/auctions\/announcements-data-results\/tips-cpi-data\/\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:the daily index ratios\" class=\"link\">the daily index ratios<\/a> to see how your TIPS principal is changing.<\/p>\n<figure class=\"caas-figure\">\n<div>\n<div>\n<div class=\"caas-img-container caas-img-loader noheight\"><img class=\"caas-img caas-lazy has-preview\" alt=\"Stack of documents Treasury Inflation Protected Securities TIPS.\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/11\/7b466740-678b-11ed-9fed-a540b0f7f530\" src \/><noscript><img decoding=\"async\" alt=\"Stack of documents Treasury Inflation Protected Securities TIPS.\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/11\/7b466740-678b-11ed-9fed-a540b0f7f530\" class=\"caas-img\" \/><\/noscript><\/div>\n<\/div>\n<\/div>\n<p><figcaption class=\"caption-collapse\">When the TIPS matures, if the principal is higher than the original amount, you get the larger amount. If the principal is the same as or less than the original amount, you get the original amount. (Getty Creative)<\/figcaption><\/p>\n<\/figure>\n<p>Because interest is paid on the adjusted principal, the amount of interest payment also varies. You can hold a TIPS until it matures or sells it before it matures. When the TIPS matures, if the principal is higher than the original amount, you get the larger amount. If the principal is the same as or less than the original amount, you get the original amount.<\/p>\n<p>And TIPS are completely liquid. You can sell them at any time. I bonds need to be held for at least a year, and you&#8217;ll forfeit a quarter&#8217;s worth of interest if you redeem an I bond before five years.<\/p>\n<h2><strong>TIPS drawbacks<\/strong><\/h2>\n<p>There are some negatives to TIPS, Tumin pointed out.<\/p>\n<p>\u201cIndividual TIPS can have a negative yield if sold before maturity,\u201d Tumin said. \u201cTIPS mutual funds and ETFs can also have a negative yield as we\u2019ve seen this year. I bonds are guaranteed to never have a negative yield.\u201d<\/p>\n<p>There\u2019s also the tax consequence.<\/p>\n<p>\u201cUnlike I bonds, you can\u2019t defer federal income tax until redemption,\u201d Tumin said. \u201cFederal income taxes are owed yearly on TIPS when held in taxable accounts.\u201d<\/p>\n<p><em>Kerry is a Senior Columnist and Senior Reporter at Yahoo Money. Follow her on Twitter <\/em><a href=\"https:\/\/twitter.com\/KerryHannon\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:@kerryhannon\" class=\"link\"><em>@kerryhannon<\/em><\/a><\/p>\n<p><a href=\"https:\/\/money.yahoo.com\/\" data-ylk=\"slk:Read the latest personal finance trends and news from Yahoo Money.\" class=\"link\"><strong>Read the latest personal finance trends and news from Yahoo Money.<\/strong><\/a><\/p>\n<p><strong><em>Follow Yahoo Finance on<\/em><\/strong><a href=\"https:\/\/twitter.com\/YahooFinance\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:Twitter\" class=\"link\"><strong><em> Twitter<\/em><\/strong><\/a><strong><em>,<\/em><\/strong><a href=\"https:\/\/www.instagram.com\/yahoofinance\/?hl=en\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:Instagram\" class=\"link\"><strong><em> Instagram<\/em><\/strong><\/a><strong><em>,<\/em><\/strong><a href=\"http:\/\/youtube.com\/c\/yahoofinance?sub_confirmation=1\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:YouTube\" class=\"link\"><strong><em> YouTube<\/em><\/strong><\/a><strong><em>,<\/em><\/strong><a href=\"https:\/\/www.facebook.com\/yahoofinance\/\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:Facebook\" class=\"link\"><strong><em> Facebook<\/em><\/strong><\/a><strong><em>,<\/em><\/strong><a href=\"https:\/\/flipboard.com\/topic\/yahoofinance\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:Flipboard\" class=\"link\"><strong><em> Flipboard<\/em><\/strong><\/a><strong><em>, and<\/em><\/strong><a href=\"https:\/\/www.linkedin.com\/company\/yahoo-finance\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:\u00a0\" class=\"link\"><strong><em>\u00a0<\/em><\/strong><\/a><a href=\"https:\/\/www.linkedin.com\/company\/yahoo-financehttps:\/\/www.linkedin.com\/company\/yahoo-finance\/\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:LinkedIn\" class=\"link\"><strong><em>LinkedIn<\/em><\/strong><\/a><strong><em>.<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In all the hoopla to grab I bond\u2019s high rate before it slid this month, Treasury inflation-protected securities, or TIPS, took a backseat for many inflation-spooked investors.But they\u2019re worth considering<\/p>\n","protected":false},"author":1,"featured_media":1746271,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[547],"tags":[],"class_list":["post-1746268","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-bongino-report"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1746268","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1746268"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1746268\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1746271"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1746268"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1746268"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1746268"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}