Comments on: Explore TIPS: A Practical Guide to Investing in Treasury Inflation-Protected Securities http://thefinancebuff.com/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html like a friend telling you about money ... Fri, 10 Feb 2012 17:31:35 +0000 hourly 1 http://wordpress.org/?v=3.1.2 By: TFB http://thefinancebuff.com/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-6977 TFB Sun, 07 Aug 2011 05:11:27 +0000 http://thefinancebuff.com/2010/03/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-6977 @Andrew Brown - Sorry about the trouble. I emailed the PDF to you. @Andrew Brown – Sorry about the trouble. I emailed the PDF to you.

]]> By: Andrew Brown http://thefinancebuff.com/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-6972 Andrew Brown Thu, 04 Aug 2011 16:51:45 +0000 http://thefinancebuff.com/2010/03/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-6972 I tried to purchase this book but was unable to download the PDF. Please help. Thanks, I tried to purchase this book but was unable to download the PDF. Please help.

Thanks,

]]> By: Jim http://thefinancebuff.com/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-6082 Jim Sat, 26 Feb 2011 16:09:02 +0000 http://thefinancebuff.com/2010/03/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-6082 Bingo! Thank you very, very much. I don't know why Fidelity couldn't have explained it as clearly as you did. They tried, in two emails, but failed. Again, thank you. You're on my favorites bar. Jim Bingo!

Thank you very, very much. I don’t know why Fidelity couldn’t have explained it as clearly as you did. They tried, in two emails, but failed.

Again, thank you.

You’re on my favorites bar.

Jim

]]> By: TFB http://thefinancebuff.com/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-6081 TFB Sat, 26 Feb 2011 15:40:52 +0000 http://thefinancebuff.com/2010/03/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-6081 @Jim - First did you find the $4,399 interest credited as a separate entry on Jan. 15, 2011? Go back to your statement for July 2010. You will find a similar entry there too. You received these payments every six months for 10 years. Those are your 3.5% interest, adjusted for inflation. Let's not forget them. Meanwhile, your original principal was kept up with inflation. I went to the same calculator and chose 2001-2011, it said $200,000 in 2001 has the same buying power as $248,699.04 in 2011. I don't know which months' CPI numbers the calculator uses but the $251k number is close enough. @Jim – First did you find the $4,399 interest credited as a separate entry on Jan. 15, 2011? Go back to your statement for July 2010. You will find a similar entry there too. You received these payments every six months for 10 years. Those are your 3.5% interest, adjusted for inflation. Let’s not forget them. Meanwhile, your original principal was kept up with inflation. I went to the same calculator and chose 2001-2011, it said $200,000 in 2001 has the same buying power as $248,699.04 in 2011. I don’t know which months’ CPI numbers the calculator uses but the $251k number is close enough.

]]> By: Jim http://thefinancebuff.com/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-6079 Jim Sat, 26 Feb 2011 15:12:37 +0000 http://thefinancebuff.com/2010/03/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-6079 I cannot get my brain around this TIPS closing amount. If I may recount? 1. On 1/15/2001 I bought $200,000 in CUSIP 9128276R8 (TIPS 10 year @ 3.5%), through Fidelity. Ten years later the closing value was $251,374, according to Fidelity. 2. Today I went to the Bureau of Labor Statistics' Consumer Price Index inflation calculator (data.bls.gov/cgi-bin/cpicalc.pl ). From 2000 to 2010 (I know the term isn’t 2001 to 2011, but it’s close enough) and it calculated that: “$200,000 in 2000 has the same buying power as $253,259.00 in 2010” In other words, my investment didn’t even keep up with inflation – and that’s without the 3.5%! Why would anyone invest in TIPS? I cannot get my brain around this TIPS closing amount. If I may recount?

1. On 1/15/2001 I bought $200,000 in CUSIP 9128276R8 (TIPS 10 year @ 3.5%), through Fidelity. Ten years later the closing value was $251,374, according to Fidelity.

2. Today I went to the Bureau of Labor Statistics’ Consumer Price Index inflation calculator (data.bls.gov/cgi-bin/cpicalc.pl ). From 2000 to 2010 (I know the term isn’t 2001 to 2011, but it’s close enough) and it calculated that:

“$200,000 in 2000 has the same buying power as $253,259.00 in 2010”

In other words, my investment didn’t even keep up with inflation – and that’s without the 3.5%!

Why would anyone invest in TIPS?

]]> By: TFB http://thefinancebuff.com/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-6023 TFB Thu, 24 Feb 2011 02:27:57 +0000 http://thefinancebuff.com/2010/03/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-6023 @Jim - $251,374 is the principal ($1,256.87 * 200 = $251,374). The interest is usually credited as a separate entry. Look for it, you should see it. I have TIPS at Fidelity. I never had any problems with their calculation. Interest on individual TIPS are paid out to you. They don't compound unless you reinvest the interest into another TIPS. Finally, I don't speculate on sectors such as oil or energy. @Jim – $251,374 is the principal ($1,256.87 * 200 = $251,374). The interest is usually credited as a separate entry. Look for it, you should see it. I have TIPS at Fidelity. I never had any problems with their calculation. Interest on individual TIPS are paid out to you. They don’t compound unless you reinvest the interest into another TIPS.

Finally, I don’t speculate on sectors such as oil or energy.

]]> By: Jim http://thefinancebuff.com/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-6016 Jim Wed, 23 Feb 2011 11:49:42 +0000 http://thefinancebuff.com/2010/03/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-6016 Thanks for the answer on the 200K TIPS return. Fidelity’s figure was $251,374 (the TIPS were not held as a mutual fund), about $4,400 less than your figure. Had I invested 200K in 10 year Treasury’s at 4%, according to Treasury Direct’s Growth Calculator (it didn’t have a 3.5% choice), the closing amount would have been $297,189.48 – 42K-plus more than the TIPS. Is the interest rate in TIPS compounded? Finally, should I challenge Fidelity on their closing amount? Final "finally": What do you think of investing in energy (especially oil) mutual funds, considering the M. E. turmoil? Thanks for the answer on the 200K TIPS return. Fidelity’s figure was $251,374 (the TIPS were not held as a mutual fund), about $4,400 less than your figure. Had I invested 200K in 10 year Treasury’s at 4%, according to Treasury Direct’s Growth Calculator (it didn’t have a 3.5% choice), the closing amount would have been $297,189.48 – 42K-plus more than the TIPS. Is the interest rate in TIPS compounded?

Finally, should I challenge Fidelity on their closing amount?

Final “finally”: What do you think of investing in energy (especially oil) mutual funds, considering the M. E. turmoil?

]]> By: TFB http://thefinancebuff.com/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-5982 TFB Sat, 19 Feb 2011 18:48:05 +0000 http://thefinancebuff.com/2010/03/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-5982 @Jim - According to <a href="http://savingsbonds.gov/instit/annceresult/tipscpi/2011/cpi_20101215.pdf" rel="nofollow">January 2011 Daily Index Ratios</a>, the final index ratio for this bond was 1.25687. For every $1,000 in face amount you bought in 2001, you should've been paid $1,256.87 in principal, plus a final interest payment of $1,256.87 * 3.5% / 2 = $21.995. That's a total of $1,278.865. You invested $200,000. They should've closed at $255,773.05. @Jim – According to January 2011 Daily Index Ratios, the final index ratio for this bond was 1.25687. For every $1,000 in face amount you bought in 2001, you should’ve been paid $1,256.87 in principal, plus a final interest payment of $1,256.87 * 3.5% / 2 = $21.995. That’s a total of $1,278.865. You invested $200,000. They should’ve closed at $255,773.05.

]]> By: Jim http://thefinancebuff.com/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-5975 Jim Sat, 19 Feb 2011 12:34:16 +0000 http://thefinancebuff.com/2010/03/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-5975 In January of 2001 I invested $200,000 in CUSIP 9128276R8 (TIPS 10 year @ 3.5%) which closed last month. Can you tell me what the closing amount is? In January of 2001 I invested $200,000 in CUSIP 9128276R8 (TIPS 10 year @ 3.5%) which closed last month. Can you tell me what the closing amount is?

]]> By: TFB http://thefinancebuff.com/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-5551 TFB Tue, 04 Jan 2011 20:20:23 +0000 http://thefinancebuff.com/2010/03/explore-tips-a-practical-guide-to-investing-in-treasury-inflation-protected-securities.html#comment-5551 Yes it's possible to put the pdf on Kindle or iPad. Yes it’s possible to put the pdf on Kindle or iPad.

]]>