About Me

Tipswatch is written by David Enna, a longtime journalist based in Charlotte, N.C. I have been investing in Treasury Inflation-Protected Securities since 1999, also called ‘the good old days.’

David Enna

This site is meant to explore ideas, benefits and cautions about TIPS and U.S. Series I Bonds, inflation-protected investments that I believe are an under-appreciated and under-used.

I’m a past winner of two Society of American Business Editors and Writers awards, have written on real estate and home finance, and was a founding editor of The Charlotte Observer’s website. So remember … I am a financial journalist, not a financial adviser. My main advice is: “Think for yourself.”

I launched this Tipswatch site in March 2011. Why? I guess I enjoy struggling with difficult concepts, and then trying to find explanations in simple-to-understand language. You can read full versions of the more than 300 articles I wrote for SeekingAlpha.com on my profile page there. I stopped writing for SeekingAlpha in November 2020 and moved back to writing solely for this site.

Ads on this site

To keep this site free and to cover my expenses, after 10 years I decided to start displaying ads beginning in February 2021. If you see an ad that appeals to you, click on it and you can help the cause. If you don’t see ads, try turning off your ad blocker for this site.

I worked in online journalism for 20 years, and I know how annoying ads can be. But …

Reminder: This site is not promoting any product other than TIPS and I Bonds, which you can buy directly at TreasuryDirect.gov, without any carrying costs or other expenses.

– David Enna, Tipswatch.com


142 Responses to About Me

  1. Chris Hadden says:

    I have a question that is not probably relevant to the website, but maybe you or other people here know the answer….. My broker is E-trade. Most of my holdings are in CDs. When you view my portfolio, without exception the “total gain” column it is all red. I do not understand this. Now a lot of the CDs were from a year ago and are at 2%. However some come due tomorrow. I do not understand how this reflects the value of the CD. Suppose I wanted to sell that CD today. Does the person buying it get the interest for the year? or do I? and if the interest goes to him why is the value shown as less than what I paid?

  2. T says:

    You write “If you are holding I Bonds with 0.0% fixed rate — especially those held for five years or more — you can consider redeeming those older I Bonds for new ones with the 0.9% fixed rate.”

    Is there a way to roll/convert old I-bonds into new without counting against the $10K limit? Or are you saying one can sell the bonds and buy new ones $10K a year at a time?

    • Tipswatch says:

      No. Redeeming your I Bonds has no effect on your purchase cap for the year. So you are still limited to $10,000 per person per year. The one workaround is to use the gift box strategy, which means you need a trusted partner to give and receive another allocation, to be delivered in a future year.

  3. NK says:

    Hello David, I absolutely love your articles and your website.
    Can you revisit the Treasury FRNs (Floating Rate Notes) which currently yield above the 13-week t-bill?

  4. Timothy J Biebelhausen says:

    Thank you for your work.
    I would love to see a chart of I bonds from inception versus S&P 500 index for the same period.

    • Tipswatch says:

      The very first I Bond was issued in Sept 1998 with a fixed rate of 3.40%. If you invested $1,000 in that I Bond at the time it would be worth $ $4,324 on Sept. 1, 2023. That is an annualized return of 5.94%.

  5. M Kumar says:

    Thank you David for many years of very useful information on US treasury bonds.
    Last few years apart from I-Bond, I have been buying EE-bond $10k every year, knowing it will earn 3.55% at end of 20 years. Does it make any sense to continuing to do so in these days. Should I sell the old ones and invest in T Bills or TIPS

    • Tipswatch says:

      This is a tough call. The most recent EE Bonds pay a fixed rate of 2.1%, not horrible, and double in value in 20 years, creating an effective return of 3.53%. But before that, all the way back to 2015, the fixed rate was 0.1%, not good, but these also doubled in 20 years. And now the traditional 20-year Treasury bond is paying more, at 3.91%. So EE Bonds aren’t really attractive right now.

      It seems likely the Treasury will update that 2.1% fixed rate on May 1, boosting it a bit. Will it change the 20-year doubling? Probably not. And neither change would affect your current holdings. So for your older EE Bonds it becomes a math problem. If you have some 5 years old, you’d earn 4.8% by waiting out the 20 years. If you have some 8 years old, those will pay 6% for the remaining 12 years. And if you have some 10 years old, those will pay 7.2% if you wait.

  6. Jerrold Ulrey says:

    Hello – A question for all, please. Assuming you have all 3 account types, is it best to hold your 5 and 10 year TIPS intended for long-term capital preservation in your taxable account, a traditional IRA or a Roth IRA?

  7. Jerrold Ulrey says:

    Thanks you Mr. Enna for TIPSWatch. I’ve just come across it and have found it immensely helpful. I better understand I-bonds and TIPS thanks to your columns.

  8. Dave Stoner says:

    Thank you David on all your work . I have had this site in my bookmarks and refer to it often . I too started buying I-bonds in 1999. The early I-bonds have done very well ( you could buy $30,000 paper and $30,000 e bonds). Enjoy your travels. Dave

  9. J. Voce says:

    Dear Mr. Enna,

    Thank you for your very informative website, which I have found most useful and informative. As a note to your recent post on the iBondCalculator, I have used it to great effect. With a very small amount of input and upkeep, it is a wonderful tool to keep track of current iBond values.

    I wonder if you would consider an article in the near future on the effect that a US Government default would have on Treasuries (Bills, Bonds, etc) and interest payments. There is a lot of chatter about reducing maturity length in oreder to mitigate risk but not a lot one what would actually happen. For example, if you had a 6 month T-Bill maturing in August, for example and the debt limit were not to be not raised, what happens? Do you get the interest and principal eventualy, albeit with a delay? Do you get nothing?

    An article on this subject would be most valuable to me.

    All the best and thanks again.

    • Tipswatch says:

      I will be writing about this debt-ceiling topic soon, from the perspective of what happened in 2011 at the peak of the crisis. This year could be very different, of course. I can provide observations but I have no idea how the Treasury would actually deal with a complete inability to raise debt.

  10. Mary Fran McCluskey says:

    Hi David! Read your column today. I was planning on buying an i-bond with my tax return that I’ll be filing probably next week after 1099-Bs come out. So are you saying don’t do that and wait till November? Thanks, –Mary Fran

  11. Hung Phu says:

    Hello David,
    I am new to your site and glad to have found you. I have learned so much!! Fantastical website.

    Like many other investors, I want to take advantage of the high interest rates on the current I Bond, and I invested 10k in Dec. 2022 mid-December.
    As a long term investor, I would like to hold it for as long as I could, possible hold it longer than 3 years or until I am retired.
    My question is could I invest/purchase a new Series I bond now in the month of Feb for 2023? Or would I need to wait until Dec 2023 to purchase?
    Please advise
    Thank you,

  12. markr65 says:

    With concerns about the debt ceiling being reached (or nearly reached) and with Treasury already taking other actions (such as, for Federal employees like myself, suspending investments in TSP’s G Fund), as a relatively new investor in I Bonds (I have recurring purchases scheduled commensurate with bi-weekly paychecks), will this result in scheduled I Bond purchases being delayed or simply not happening?

  13. HB says:

    With the new year just days away, I’m curious what strategy you recommend concerning when someone should decide whether to decide to purchase an I Bond in 2023.

    The current rate at the start of 2023 is 6.89%, which will reset to a yet-to-be-determined rate as of May 1, 2023. And thanks to your site, we should have a pretty good idea what the May 2023 rate will be by mid-April 2023.

    Right now, it looks like the May 2023 rate could be considerably less than the current 6.89%. Some regular FDIC-insured savings accounts are paying around 4% at the high end currently, so I’m wondering whether it might make more sense to wait until the second-half of April 2023 before deciding whether to purchase an I Bond in 2023. Your views?

    I realize that lower I Bond rates means lower inflation numbers, which is a positive overall for the economy. My question is simply, for someone who is deciding between an I Bond purchase or investing in an FDIC-insured high-interest-rate savings account in 2023, what’s the best strategy to ensure the best outcome?

    Thanks for whatever opinions you can share.

    • Tipswatch says:

      I will be writing about this early in January, but right now my thinking is that there are a lot of new I Bond investors who are interested only in a short-term return (getting out after a year or 15 months). Those people should buy at the end of January, if they want to pull in the 6.49% for six months, and then a new rate for six months. Better to get the clock started right away. But for long-term investors in I Bonds, waiting until mid-April makes sense. The investment return is the same (January vs. April). There is a decent possibility of a higher fixed rate in May, but things could change drastically before then.

  14. Dom Simon says:

    In the latest copy of Bottom Line you recommend building a treasury bill ladder. I have been doing that with my brokerage (Vanguard) but was hoping your website would have more info on T-bills. I use TreasuryDirect for auction dates and results, but would like a site with more information and advice on t-bills like you do on your site for TIPS. Do you know any websites out there?

  15. Chris Hadden says:

    I am wondering if anyone here can offer thoughts on this question. This summer for the first time I purchased 15k worth of tips through government auction… but in my IRA through my brokerage account. I didn’t know what interest rate I was going to get but it ended up at .12%. This is a 5 year tips. Of course now my thoughts are maybe I should try to get out of this and rebuy on secondary market. I don’t really grasp exactly what I might get for mine. If I go by the gain/loss column it says they are down 3.65% in value. Which means about a $550 loss. ( Assuming those numbers have some actual meaning.) Now if I go and look at buying TIPS on the secondary market I am confused. It looks like the coupon can be had for 2.2% That seems to be what the YTW is indicating. Roughly speaking that would mean I would be giving up 2 years of interest to sell early. Can anyone tell me if I am in the ball park on this. What would be the best strategy if I wanted to hold for 5 years out?

    • Tipswatch says:

      If you bought on June 23 you got a real yield to maturity of 0.362% and you paid an unadjusted price of about 98.87 for 100 of par value. So you paid about $15,183 for $15,356 of inflation-adjusted principal. Now that TIPS is yielding about 1.83% and its price is about 92.81 (the discount is big because the coupon rate is only 0.125%). On the plus side, you now have about $15,750 in accrued principal. I am not a financial adviser and can’t recommend an action. What would I do? I’d ignore the market swings and continue to hold this to maturity, when the par value will return to $100. (And in fact, I was a buyer of this TIPS and I will continue to hold it.)

      • Chris Hadden says:

        I did buy on June 23, the trade confirmation says price is 98.87 as you say. With a .125% coupon. This is being held in my IRA at e-Trade. If I look at that account it says under the price paid column that price paid is 101.11 Now why would that be? I purchased this through the broker at auction. I am not aware there was some charge for that….. Do you know when the inflation interest will be added to the principal? Is it at the end of this month? Since the auction was reopened I thought perhaps it would be earlier.

        • Tipswatch says:

          As I noted in my article on that auction, the adjusted price was $101.22 because there was an inflation index of 1.02376 on the settlement date of June 30. So you actually bought (and received) about 2.4% of extra principal at the discounted price. Inflation accruals happen every day. The coupon payments for this TIPS are made in January and July.

          • Chris Hadden says:

            I went and read your post on this auction. Truthfully Tips are baffling to me. So I paid more , because interest had already accrued from the original auction date? Is that correct? I was just looking at this in my account I purchased $12,000 of these tips ( not 15k ) the value of them is showing as $11,736 so it says I am down $264 on the purchase. Now I understand that is what the market would give me at this moment. I see I got about $8 in interest on 10/17. Otherwise nothing. So this TIPS is accruing interest daily, but it is not something I see anywhere. And one day in January this accrued interest will just be applied against the “value” shown in the brokerage account? ( which isn’t the true value if you hold it for the full term) is that how it shows in your account?

  16. Rich Sita says:

    Hi, I just read your article entitled “Short-term I Bond investors: Be patient with your exit strategy”. I believe your table is incorrect. I Bond s purchased in oct 22 will indeed receive 9.62 for 6 months. But they will not receive the 6.48 for the next 6 months – only for the month of April 23 – then assume the unknown interest rate announced in May.

    • Tipswatch says:

      All I Bonds earn all variable rates for a full six months, no matter when they were purchased. So an I Bond purchased in October gets 9.62% for six months and then 6.48% for six months and in October 2023 will get the variable rate to be announced on May 1. See my I Bond Q&A: https://tipswatch.com/qa-on-i-bonds/

    • Tipswatch says:

      From TreasuryDirect, in explicit terms:

      Although we announce the new rates in May and November, the date when the rate changes for your bond is every 6 months from the issue date of your bond. Use this table to understand when each new rate begins to apply to your I bond.

      If we issued your bond in – Your interest rate changes every
      January – July 1 and January 1
      February – August 1 and February 1
      March – September 1 and March 1
      April – October 1 and April 1
      May – November 1 and May 1
      June – December 1 and June 1
      July – January 1 and July 1
      August – February 1 and August 1
      September -March 1 and September 1
      October – April 1 and October 1
      November – May 1 and November 1
      December – June 1 and December 1

  17. Jim says:

    David, I think I saw somewhere on your site a recommended book for buying TIPS, but cannot relocate it. Do you recall a book you may have mentioned? Seems it had a short title.

  18. Ron Raisleger says:

    I am new to owning Series I Bonds. For example, I purchased a $10,000 Series I Bond in May 2022 when the interest rate was 9.62%. As of Nov 1, 2022, the Series I Bond value is now $10,262. Can someone explain the math involved to come up with the $10,262 value?

  19. Dee says:

    Thanks for all the information and tips on I Bonds. And I see that there’s a lot more on your site to learn from! For now, a question regarding I Bonds— once you pass the 5-yr mark can you cash out prior to maturity without losing accumulated earnings or are you required to wait until maturity to hold on to all accumulated earnings?

  20. Clark says:

    Hello David. Thank you again for a great site.

    Question: when tracking your holdings in a spreadsheet for individual TIPS held to maturity, does it seem logical to simply use the face value * inflation factor, rather than the market price * inflation factor? In a brokerage account, coupon payments go to settlement account so that part is covered.


    • Tipswatch says:

      This is how I do it, because I never sell a TIPS before maturity. Par value x inflation accrual. If you own the security in a brokerage account, the broker will show you the market value, but I ignore that in my spreadsheet.

  21. Chris Hadden says:

    I noticed your web site got a shout out in a you tube video I was watching. Can’t recall the channel. It is an asian woman who did a number of i bond videos which is how I found out about them. I’d like to get your thoughts on something. Back in May I bought a bunch of 1 year CDS for 2%. I could kick myself now but I never envisioned rates would go up so quickly. I just recently bought 6 month CDS for 3.9%. I have pretty much tied up all my money now till May. My question is where do you think these rates are going? Do you envision rates climbing through 5-7% by the spring? or do you think this will flatten out or decline? I remember back in the 80’s I had a CD at 13%. Now I doubt that is where we are going but I would hate to miss locking in whatever the best rate will be for a longer term. I actually considered selling the 2% CD at a loss to buy the 3.9% but since I am almost half way there it does not get me anything. Where do you see the rates going?

    • Tipswatch says:

      The YouTube channel was Diamond NestEgg run by Jennifer Lammer. I’ve featured two of her videos recently. On rates … it’s impossible to predict where we are heading. The surge higher in the last two weeks has been amazing and I didn’t see that forceful a jolt. I think the Fed will carry on with a couple more rate increases this year — it has to prove its inflation-fighting credibility. But into 2023, we should see the U.S. economy weakening and then the Fed can call a “stall.” Also, will there be some sort of global financial crisis? But if inflation continues surging, the Fed will have no choice.

    • Jimbo says:

      The following link is to a “When to Break a CD Calculator”.


  22. Ron says:

    I have 2 questions.

    When trying to set up an entity account TD says this:
    “NOTE: The Entity Name (Registration) is used as the registration for the account and must accurately reflect the legal instrument of authority. An invalid Entity Name (Registration) may complicate the processing of future transactions.”

    1. I want to establish an entity account for my sole proprietorship but there is a little confusion about how to exactly do this. My yearly Schedule C form on my tax filing lists the company name as Telesis. My business license says Telesis Records. Which one do I use?

    2. The TD tutorial says this:
    An entity is not permitted to:
    Name a secondary owner or beneficiary in its registration. Does this mean,
    Only my name as the registrant but a secondary owner or beneficiary can be
    Named somewhere else?

    Thank you,


    • Tipswatch says:

      This is beyond my scope of knowledge. I suspect that the key for TreasuryDirect is the Taxpayer Identification Number and the IRS Name Control. Seems to make sense to use the name the IRS would recognize. Sorry, I just don’t know.

  23. Chris Hadden says:

    Would you clarify something for me. I recently purchased some i bonds with the great rate north of 7%. So I am maxed out of those. I was looking at the TIPS but I don’t understand what inflation adjustment you get with them. They do not appear to be the same as the i bond. Aren’t they also adjusted every 6 months? Are tips currently earning 7% on the bond principle? If not why is it lower than an i bond? Thanks

    • Tipswatch says:

      TIPS actually adjust each day for inflation, based on the non-seasonally adjusted Consumer Price Index (CPI-U) two months earlier. But since the Treasury only pays interest twice a year, the effective adjustment happens with each interest payment, a half a year at a time. I Bonds pay an interest rate based on a past six-month period. A TIPS has a real yield to maturity that tells you how that TIPS will perform in the *future*, above or below inflation. I Bonds purchased today have a real yield of 0.0%, so some TIPS maturities have a slight yield advantage, but I Bonds have better deflation protection. Realize that yes, TIPS principal balances will have increased 8.3% in a year, once the June accruals are completed.

  24. Pingback: #Bonds May 7 - Coach4aday

  25. Glenda says:

    Well, the 10 year TIPS yield just broke positive (+0.13) and the 5 year TIPS are getting close (-0.27). Maybe there’s some hope for purchasing TIPS with positive yields this year. Although at my age, I’ll have to stick to the 5 year TIPS. I’ve got to admit that paying above par to cover accrued inflation at the June re-opening does give me pause. However, the best IRA CD out there currently is a 3 year term @ 2.97%. So, I’d be losing 5% against inflation on that IRA CD. Guess that accrued inflation upcharge doesn’t look that bad after all.

  26. Clark says:

    Hello David. With the talk in the news about deflation fears, I re-read your posts on this from 2015 and 2016 and the effects on TIPS and I-bonds. You also made a point about this in a comment I posted recently, asking why it might be concerning to purchase a TIPS on the secondary market with a lot of accumulated principal (where a deflationary period just after purchase would be unfortunate). And, of course, deflation would impact your regular analysis of nominal Treasuries versus TIPS. If deflationary fears continue, it might be worth re-visiting this. Thank you again for the site.

    • Tipswatch says:

      I’m not too concerned about deflation in the short term, so that wouldn’t stop me from purchasing a TIPS at a reopening auction. The May auction is a reopening of a 10-year TIPS, and it could have a real yield positive to inflation. It will have a fairly hefty inflation index of 1.03672, meaning investors will be purchasing an extra 3.7% of principal above par. Not a huge deal, in my opinion. I will be previewing that auction later in May.

  27. Bill Smalling says:

    Signing up for your notifications.
    Thanks in advance.

  28. Felicia Byrum says:

    Signing up for notifications. Thank you for easy to understand info!

  29. Steven Devlin says:

    Signing up for new post notifications. Thanks for the great material.

  30. Sicily in April! I’m jealous! I did that five years ago soon after I was Retired. I’m glad I found your website as I manage my unexpected retirement!

  31. Robert Goldberg says:

    Hi David,
    Thanks for the great work that you do. With tax refund season now here, could you please do a piece on the mechanics of purchasing I bonds with refunds? I know it is a clunky process, but does it work? What is the approximate deadline for filing to get the purchase done before the May 1 reset?

  32. C Marshall says:


    Great site, really enjoy and appreciate your work!

    Your site states the limit of $10,000 in iBonds per social secruity number. Isn’t it really $10,000 per person with a social secruity number. The reason I ask is that a recent WSJ article, and many financial sites, indicate that for individuals with a sole proprietorship and EIN, a second $10,000 annal purchase is allowed. Several sites cite TD responses to the question that, at least to me, do not completely answer the question. Clearly, there are many people doing this over a period of many years, and thus TD must be aware it is happening without comment or consequences. Your thoughts would be helpful.

    Thank you,

  33. Howie says:

    I just listened to David Enna’s POD cast about I Bonds. It was a great interview. It was dated Oct 2021 i believe. Now being February 2022 is it still possible to purchase I Bonds and take advantage of the interest rate he spoke of? If so how long does that rate stay in effect? I know the feds are looking to increase rates. How will that effect the I Bond and is it still a good buy. Tired of next to nothing interest rates for accounts at banks. Thank you.

  34. Clark says:

    Hello David: Your site is great for discussions on upcoming auctions and the mechanics behind them. But if one is trying to make an “instant” TIPS ladder, one would have to buy on the secondary market. I’m assuming that issues such as purchase size and bid/ask spreads may make purchases in the secondary market more expensive than purchase at auctions. But do you have an opinion on how large such penalties really are? Thank you!

    • Tipswatch says:

      I’ve never purchased a TIPS on the secondary market, and never sold one, either. I have used Vanguard brokerage to buy individual TIPS at auction in a tax-deferred account. There is no commission or spread on that purchase. I do think — but I don’t know for sure — that small traders in TIPS will face some bid/ask issues. I don’t think TIPS are heavily traded in small quantities.

  35. Archie says:

    I have a 10 year ladder of TIPS. Why shouldn’t I sell TIPS that have appreciated and buy new ones at auction? The Bond Market is efficient. TIPS at auction offer deflation protection.

    • Tipswatch says:

      You will be able to sell the TIPS you already own at a premium, assuming they have a positive coupon rate. That’s because real yields are now deeply negative. And then when you buy new TIPS, you will pay about the same premium because the new ones will have a deeply negative real yield, well below the coupon rate. So, why sell TIPS with a good coupon rate to buy TIPS with a 0.125% coupon rate and a deeply negative real yield?

      • Archie says:

        So I should stick to my current simplistic ladder strategy? Buy 10 year tips at auction, hold to maturity. Or is there is something better I can do and still maintain the TIPS allocation in my portfolio?

  36. Clark says:

    With all of the discussion of I-bonds these days, have you tried this “front-loading” technique for purchases of a large block of I-bonds via gift purchases between spouses, which apparently accrue interest as they sit in the “gift box”, and then meter them out in subsequent years at the $10K/yr limit? This is discussed here: https://www.bogleheads.org/forum/viewtopic.php?f=1&t=306297

    • Tipswatch says:

      I have been reading these discussions, but I don’t think I’ve seen “conclusive” findings that the Treasury will allow mega-purchases to be doled out as $10,000 a year gifts for many years in the future. Several people seem to be trying it, though. If a couple had $100,000 sitting around, they could “in theory” stash $50,000 away each and then dole it out in $10,000 a year increments. That would replace their next five years of purchases, and earn interest along the way. The strategy would backfire if the fixed rate rises substantially in the future. I still think we need more information on how far Treasury would let this go.

  37. Bret says:

    Hi Mr. Enna, can you help me figure out the math of calculating the yield on TIPS auctions? The latest auction was an adjusted price above par at $112.982468 with a 1/8% interest rate. The median yield was -0.939%. I’m not great at math but would like to know how to calculate this. Thanx.

    • Bret says:

      I meant to say median yield of -1% for the 10 year

    • Tipswatch says:

      The adjusted price is based on the high yield, not to the median yield, and the high yield is what all noncompetitive bids get. The high yield was -0.939%. The coupon rate was 0.125%, or 1.064% higher than the high yield. Very roughly, without considering compounding, 10 years x 1.064% = 10.64% for the purchase premium (the actual premium was 10.94%, resulting in a price of $110.94). Then add in the accrued inflation of 1.84% and you get 110.94 x 1.0184 = $112.98.

  38. I love your work. I am huge following of your blog now for over 3 years. Please continue to write. Your analysis is always factual and spot on the current bond and treasury conditions. Sad to see you leaving Seeking Alpha; you were a beacon of information.

    I have one question, this is loaded political question sort of. In the scenario that US Govt has a hard default, is there is good chance they default on making these TIPS payments until the default clears?

    • Tipswatch says:

      It’s hard for me to speculate that the U.S. government would have a long-term “hard default” and not pay its Treasury debts. So I don’t think that will happen. If it did happen, the stock market would collapse and the bond market would fall into chaos. I suppose we could have a temporary default, if Congress falls into gridlock and can’t increase the debt limit. But I think the government would still try to pay Treasury investors. Lots of job furloughs would result, though.

  39. Gilbert Young says:

    Thanks for all of the information you provide. I have one easy question. If you buy an I Bond near the end of a month do you receive interest for the entire month? I have been buying some near the end of each month and Treasury Direct appears to indicate you get a full months interest.


    • Tipswatch says:

      It is correct that you can purchase a Savings Bond any day of the month and get credit for a full month’s interest. This is strategic if you were planning to hold an I Bond for 12 months and then redeem it. You can cut the holding period down to very close to 11 months.

  40. Jason Smith says:

    Thank you for the thorough explanations in plain ‘ol English of TIPS vs. I Savings Bonds. I was scouring the internet today for details on the tax implications of I Bonds, and you answered all my questions! I’ve finally realized that I’m steadily losing money in my “High Yield” savings accounts for money that I’ve set aside for an emergency fund, when I could have easily had it in an I-Bond, and without too many restrictions either. I’ve been entertaining three scenarios for redeploying my bank savings: TIPS ETF, I-Bond, or Muni Mutual Fund, and you convinced me that I-Bonds are the best option. Even with the possibility of forfeiting three months interest for early withdrawal, you can still get a better return than with a bank CD or savings account, and with proper tax planning, you can cash it out when your taxes might be lower one year in the future. Thanks for all the great info!

    • Tipswatch says:

      Yes, a lot of investors use I Bonds as an emergency fund, but they are more of a “back-up” emergency fund, since you need to hold an I Bond 11 to 12 months before you can redeem it. And the other limitation is the $10,000 a year investment limit. As long as you can deal with the delay for the redemption, it works. (But not to pay next month’s Neflix bill.)

  41. Robert says:

    Dear Mr Enna,
    Great site! Any chance you will write about “amortization of bond premium” for those holding TIPS in a taxable account?

    • Tipswatch says:

      What I am assuming you are asking about: When you pay a premium over par value, how is that premium handled when the investment matures or your sell it? And there is the option to “amortize” the premium as a tax write-off each year? This is way out of my skill level, sorry. It’s a great topic; I need a CPA to explain it to me.

  42. William H Frey says:

    Last line in the chart on today’s article showing the 5, 10 and 30 year break even rates should be 30 year BE not 10 year BE. Great post.

  43. mike says:


    Thanks for all the great work you do surrounding government inflation protected bonds. However, aren’t you concerned now that our government may default on all of their debt? If they default anyone holding government bonds will lose all their money. What are your thoughts on this matter? Should one sell all of their bonds and not even be in them until our government can get their financial house in order?

    • Tipswatch says:

      Hello Mike, I think the chance that the government will default on Savings Bonds is extremely unlikely. In fact, I don’t think any Treasury asset will default, because at the worst, the U.S. government will simply print money to pay back those debts. And that would mean inflation, and I Bonds and TIPS protect against inflation.

      Where would you put your money to protect against a U.S. default? The stock market would crash. Interest rates would skyrocket. Housing prices would collapse. The value of the dollar would collapse. I guess gold would be the answer?

      • mike says:

        Hey David,
        I came up with the same answer that you did. As far as the govt. not defaulting on or restructuring their debt b/c they can simply print money and this would cause inflation and I Bonds and TIPS should help protect against that, I not so sure. The govt. intentionally misstates the actual rate of inflation so the bonds never keep up and then even if they did one would be paid back in dollars that would be worth less. And if the bonds are in US dollars and the US dollars are being devalued then shouldn’t that cause the value of the TIPS and I bonds to be worth less since they are US dollar denominated?

  44. Pingback: The Debt Ceiling Is The Least Of Worries For T-Bills - Financial Consultant

  45. Robert Click says:

    Hello David,
    I just read an article you wrote about the SSA cola, and the chained CPI-W index. I am retired, and started drawing SSA in 2004.

    I wouldn’t mind emailing you privately about differences in what that CPI shows or tracts, compared to actual consumer prices. It’s way off. Believe me, once you retire, your buying power does not keep up with inflation, particularly when it comes to groceries, clothing, and restaurants. And in other ways, property tax increases or vehicle registrations.

    There are increases in only one thing that can easily wipe out the Cola increase, if we even get one. For this year, the Cola was a joke, .2%. While the Medicare Part B premium increased for everyone, some much more than others. In 2016, there was no Cola, and the total of them since 2010 is way behind “actual” inflation.

    I don’t react charts and graphs, I go by changing prices in my own shopping. Feel free to email me and I can begin tracking everything and report what it’s like in the real world, not indexes, charts, graphs, etc.

  46. John Swan says:

    This blog is terrific. It is just what I need as a retired many year buyer of some TIPS and I Bonds with limited financial knowledge managing my own finances. This is so helpful for general knowledge of TIPS/I Bonds and for specific information about current rates, auction dates, etc. Thank you.

  47. Clifford Christenson says:

    I love your blog! Are you going to share your view about the upcoming (January 2016) 10 year TIPS auction?

  48. Frank Bahnson says:

    Thanks for your blog…very helpful!

  49. Len says:

    If I can locate the references I will pass them on, but dollar cost averaging was debunked about 20 years ago (1994). Notice that Vanguard, for instance, no longer recommends it and hasn’t since then. (A Statistical Comparison of Dollar-Cost Averaging and Purely Random Investing Techniques, P. S. Marshal and E.J. Baldwin, Journal of Financial & Strategic Decision Making, Volume 7, Number 2, 1994) Of course this favorite of mutual fund promoters and especially 401(K) advisors refuses to die because it works so well. For THEM. That is, convince the clients it is the smart thing to do when in fact, generally, it is the only thing they can do- add a little each month or quarter. Well you may care to investigate further. Len

  50. Ed says:

    Joe, You are most welcome, glad to be helpful.
    Separately, I do this: IMO, some decisive histories are seldom shown, in order to diminish learning and enable ignorance, to enhance financial sector profits.

  51. Joe Keenan says:

    Ed, thank you very much. I just watched the whole thing. Even a layman like myself knows that world government have been printing money like crazy and that ultimately the world economy cannot maintain equilibrium if that is the case. The current world deflationary pressures weather government caused or not seems madly illogical given the debt. Governments may try to partially get out of the problem via inflation, as she says, but I agree with Paul Volcker (who she quotes) who said once you start trying to manage inflation, it will soon get out of your control. Inflation is the elephant in the room. Weather driven by governments or markets, with this massive amount of debt overhanging the economy, it will be back with a vengeance at some point. Joe

  52. Ed says:

    JK, This is valuable I think! Here
    includes access to a 38:10 interview of Malmgren.
    At 34:00, begin ‘financial crisis end game’.
    At 36:05, ‘debt so large, it won’t be paid’. So, default/creative solutions! At 37:10, ‘USA is choosing inflation’.
    At 38:10, end.
    Malmgren was unknown to me … Impressed as credible.

  53. Joseph Keenan says:

    Thanks much for your quick reply, Much appreciated. I am less interested in yield than a spike in inflation during the holding period of the fund. Low vol would be a good thing. Being on a fixed income, deflation is a very good thing for me, I am not complaining, but need that inflation hedge. Thanks. Joe

  54. tipswatch says:

    Joe, I have looked at short-term TIPS funds, but I don’t invest in them. They aren’t as volatile as the overall TIPS market, which is good, but the yield is very low. This two-year charts shows Vanguard’s VTIP is down a bit, but the volatility isn’t very high:


  55. Joe Keenan says:

    David, (hope you don’t mind me calling you David), what is your take on the Pimco (or any other 0 to 5 year) short term tips mutual fund? I am looking to protect myself from rising interest rates as much as possible while minimizing decrease to principal as much as possible due to said rising interest rates. If the mutual fund holds its tips to maturity and buys new ones at the increasingly higher rates, negative impact of rising rates should be fairly minimal on the 0 jto 5 year maturity, no? or am I missing something? Thanks. Joe Keenan

  56. BigDaddyRich says:

    Thanks for your advice; that should’ve been my focus from the beginning. BUT — I think I’ll keep my current TIPS, and on occasion buy a TIPS (and also the new floating rate note) at a much higher amount ($200-$500) on a laddering strategy.

  57. tipswatch says:

    BigDaddy, at that level of investing I would suggest aiming for the US Savings I Bonds, which currently pay the rate of inflation, and EE Bonds, which pay less (currently just 0. 20%) but are guaranteed to double in value in 20 years, which equals a guaranteed return of 3.5% a year.

  58. BigDaddyRich says:

    How much should I spend on a TIPS through TreasuryDirect to get a decent return? I just bought a 10-year Note for the minimum $100, at an interest rate of 2.50%. But my interest payment will only be $1.25. I’m receiving a similar small interest payment on a $100 Bond. I’m thinking of selling those two securities sometime next year, and just concentrate on buying TIPS and bothSeries I and EE Savings Bonds. (I know this is not your focus, but should I also employ a T-Bill laddering strategy once the rates go up?)

  59. tipswatch says:

    Paul, I wrote a blog on June 21 saying that I was returning to TIPS mutual funds with small investments, and I will dollar-cost average in over time. FINPX is one of the funds; Vanguard Inflation-Protected (VIPSX) is the other.


    My negative view in May 2011 was way too early, as FINPX was about to benefit from sharply declining yields. These funds are the easiest way to hold TIPS in a retirement account, but I still prefer to buy and hold TIPS to maturity.

  60. Paul says:

    You wrote in May of 2011 about why you were exiting the Fidelity Inflation Protected Bond Fund (FINPX). What is your opinion of that fund today?

  61. Jimbo says:

    Did you see what happened today? The 10 year TIPS just issued on 7/15/2013 with a YTM of .384 had a yield of .446 as of yesterday. During the course of the morning, it got up to .494! That’s 10 basis points higher than when it was issued a mere two weeks ago. Since there was an FOMC announcement later in the day, I figured that this was a Pavlovian response to last month’s meeting. After the FOMC report was released, yields plummeted. By the end of the day, it had gone down to .392! At the start of the day, I had hoped that this trend might cause the 5 year TIPS being auctioned on August 22nd to actually have a positive YTM. After today’s roller coaster ride, I seriously doubt that will happen.

  62. Ed says:

    David, I thought I would ask you to declare something that I reckon you believe! When I first bought TIPS in 1997, conventional wisdom was ZERO chance of default by USA Treasury. ‘Lately’, this chance is said, by some voices, to be above zero, and I suppose I agree. But I figure the following, and ask if you figure the same: The USA will ‘have’ much more inflation, far ahead of defaulting!

    • tipswatch says:

      Ed, I still operate under the assumption of zero chance of default. There is higher chance that the Treasury will manipulate the inflation rate to lower its costs and our return. And, yes, in reality, there is a higher than zero chance of default. Once we hit that point, though, I’d assume the stock market, bond market, every market would be in shambles. Gold? That might work. It would be ugly.

      • Len says:

        The Treasury has been manipulating the CPI figures since the Boskin Commission. Author Fred Sheehan has demonstrated it in his two books on Allan Greenspan.

  63. Ed says:

    VERY helpful, thanks much!

  64. Ed says:

    David, I have had my TIPS in Legacy Treasury Direct forever … I may open a TreasuryDirect account for my TIPS and I-Bonds — it is all online, I am wondering about any vulnerabilities of this account! Have you any view … any source to direct me to? Thanks.

  65. tipswatch says:

    Jack, this is a great question. I would guess that your mother probably doesn’t expect to live to 2029, so this isn’t a buy-and-hold issue. My TIPS philosophy is always buy and hold, expecting to hold to maturity and get the inflation adjustment, plus the base rate, in the super safe section of my portfolio. (I don’t worry about the ups and downs of the current market.) But that isn’t for everyone, and in your mother’s case, it might make sense to sell the TIPS now and collect the profits, instead of waiting until 2029 to collect about the same amount of interest. It does balance out. And the value of these TIPS will probably decline five years out, I agree. The big question is: What is your next investment with these profits? I don’t have a strong opinion about REITS, but I own a REIT index I pretty much ignore. There aren’t any super-safe investments out there now paying an attractive yield. Getting yield means taking risk. TIPS aren’t risky, and that is why they are so popular now. Good luck with this decision.

  66. Jack says:

    Great site, Dave. I have a question. My father passed away five years ago and left his IRA to my mother. The IRA was concentrated in Wells Fargo stock so I diversified her portfolio and laddered some TIPS. She is well diversified in stocks, a dwindling number of corporate bonds, CDs, TIPS and farmland. Her TIPS have significantly appreciated. She has one purchase, 2.5% due in 2029 that has almost doubled in value. I have been considering selling a couple of these for about a year. Any thoughts? I bought them as an inflation hedge, but if rates rise, these bonds will drop. She has little residential or commercial real estate exposure so I could reinvest in some type of REIT. Thank you in advance.

  67. Joseph Keenan says:

    Thanks much, I have purchased a little bit of high dividend stock index funds to capture some yield, but am not sure I want to continue this. When inflation hits, stocks across the board will initially take a hit, won’t they? My thinking is that inflation protection and safetry of principal is more important than chasing a few points of yield at this time.

  68. Joseph Keenan says:

    Greetings, just read an article that says that you can receive a tax refund, if you are due one, in I bonds up to a maximum of $50000. Is this $5k over the $10k annual limit? If yes, for those of us currently paying quaterly witholding taxes, what would prevent us from overpaying our quaterly witholding for the year in the amount of $5k to get the additional I bonds? Thanks. Joe Keenan

    • tipswatch says:

      Joseph, that’s correct, you can use your tax refund to buy I Bonds. In a rare moment of clarity, Treasury Direct put up an excellent Q&A on this issue:


      It says: In any single calendar year, you can buy up to a total of $5,000 of paper I Bonds using your refund. The I Bonds are issued in paper denominations, so you are bypassing Treasury Direct, which has the $10,000 per-person cap.

      I suspect the Treasury Department would love to have you overpay your quarterly withholding, money it can sit on through the year and then issue you I Bonds when you file tax return. If you do pay quarterly withholding, though, this is an excellent strategy, since you won’t earn anything on your money anyway. Loading up on I Bonds makes great sense right now, and will probably continue to make sense for at least two more years.

  69. steve says:

    do you have an opinion about inflation protection on an single premium immediate annutiy as compared to tips? Payout rates on annuities are very low, but if tied to cpi it will adjust upward. In the mean time the payout rate for inflation protection is approximately 2% less than an annuity without inflation protection.

  70. tipswatch says:

    Joe, I am with you on I Bonds, which can also work as a short-term investment you can hold until interest rates rise. On the ladder, you are correct that the ‘market value’ of your TIPS might rise and fall until maturity. But at maturity, you will get back your original principal and the inflation adjustment to principal. So it might be tempting to sell TIPS you hold now that have risen dramatically in value. A lot of investors feel that way. Not my strategy, though. That is how a ladder is supposed to work in a true buy-and-hold strategy. I just hold the TIPS to maturity and I only track the current par value (original principal plus the inflation additions).

  71. Joe Keenan says:

    I am thinking of buying ibonds in addition to tips: unlike the current negative yiels on tips, you purchase ibonds at par. ibonds are only taxable when you cash time in. On an ongoing basis both the interest and the principal kicker are not taxed.

    I have bought tips in the last year, and they have gone up…but i am building a ladder and plan to hold all til maturity. I will not benefit from the market appreication in these…as the underlying bond near maturinty, the market premium will have to go out of them, no? Thanks. Joe

  72. tipswatch says:

    Sal, I come from the buy-and-hold school of TIPS investors. I have been buying them from Treasury Direct for 13 years, and I have never sold an issue. Some of those early issues were awesome investments, and some are maturing this year, unfortunately.

    Buying and holding TIPS is an extremely conservative investment. In theory, there is no default risk. There is deflation protection, since you will get your original investment back at maturity, no matter what. And you are protected against future inflation. You aren’t selling so you don’t need to worry about the ‘current value’ of your TIPS. You just wait for maturity.

    Buying a TIPS mutual fund is also a conservative investment – but not as conservative. The net asset value of a bond mutual fund will vary over time, as interest rates rise and fall. Since TIPS rates have been falling for several years, to all-time lows, TIPS funds have done very well. If rates rise quickly, those funds will feel the pain – not a wipeout, but along the lines of 5% to 10% of principal value.

    I don’t see interest rates rising quickly in 2012.

  73. Sal says:

    I just came across your Blog and have really enjoyed reading it and becoming better eduacated about TIPS! I have many questions I’d like to ask you, but will ask one ata time not to be to much of a burden. My first question has to do with investing directly in Mutual Fund TIPS.

    What are the advantages over just outright purchase of TIPS?

    What are the disadvantages of the TIPS Fund over outright purchases?

    I thought I had a fair grasp of the subject, but after reading your Blog??? I just invested monies in a Mutual Fund TIPS several day ago, which I now see was not such a good idea!

    Look forward to hearing from you,


  74. Fred Eyer says:

    Hi David. I have just discovered your blog, and want to thank you for posting on this subject. I am going to risk asking a (possibly very naive) question, and hope that I’ve come to the right place for a response I’ve sought all over the net.

    I started contributing to a Vanguard TIPS fund in my IRA back in 2007, and in comparing my total investment with the value currently displayed I’m showing a 27% gain in those figures. My question: is this gain real, and if so, why is this considered such a “boring” investment? And if I were to sell this fund now (which I don’t plan on doing), are those gains realized?

    Thanks for any clarification you can give!

    • tipswatch says:

      Fred, I assume you have been reinvesting your dividends, so some of that gain could be from the dividends that have already been taxed. So the entire 27% might not be a taxable gain. Most of the rest would be a long-term gain? And you are right, TIPS funds have been a fantastic investment and certainly not boring — you’ve done very well in a time of stock-market distress.

      The one thing to keep in mind is that day after day – for more than six months – TIPS mutual funds have been hitting all-time highs. That is because the base rates for TIPS have been hitting all-time lows, lower than most TIPS investors thought possible. Part of the reason is that the Federal Reserve has been buying bonds to force interest rates down. And it has worked. Plus, turmoil in Europe has made Treasury investments very attractive as a safe harbor.

      This could – or I might say will – reverse in the future. When that happens the base interest rate will rise and TIPS mutual funds are going to give up some of those impressive gains. But when will interest rates reverse? The trend is still gently down and the Fed is continuing its efforts to keep them down. There is some danger out there for TIPS mutual funds, we just don’t know when.

  75. tipswatch says:

    Vijay, your strategy of buying TIPS since 2008 has certainly been wise. Every single one of these issues has gone up in value. (Pretty much every TIPS ever issued is up in value, since rates are touching all-time lows.) Buy-and-hold investors who are building ladders don’t get much joy out this, though. I am still a net buyer of TIPS, buying more than those that mature, and so I would love to see lower rates and lower values.

    I was a heavy buyer of TIPS in the first half of this year (and I started this blog then). In that long-ago age – 10 months ago – TIPS were super boring, super predictable. Since mid-year 2011, TIPS have been dipping into uncharted waters. We are seeing negative real returns all the way up to 10 years. I stopped buying in July, The last I bought was the 30-year in late June at 1.744%, which looks good today.

    Next year, I have two 10-year TIPS maturing and I expect to reinvest that money and more into TIPS. I just hope to see better rates.

    Next week’s 10-year, likely to draw a negative real return against inflation, isn’t attractive. But is is a super safe investment. So it all depends on your fear level. Do you fear future inflation. Do you fear future stock market declines? If you say yes, then this is not a bad investment.

  76. Vijay says:

    David: I have been buying TIPS as a long term investor since 2008. I came across your blog only a month ago as I began to wonder whether to continue on the ladder or hold for a while. Have you written anything on the ladder concept. Your analysis of the data has given me additional perspective and has been a great help. Thank you! Vijay

  77. Ronald Alley says:

    To retire in 6 months. Have I-Bonds and also a TIPS mutual fund in equal dollar amounts. Question: I plan to hold bonds until I need them but not sure what to do with the mutual fund. I keep hearing the fund is doomed to drop. Appreciate any advice.
    Ronald A

  78. Matt poskonka says:

    Thank you so much for this blog, which is informative and fair minded. Keep up the excellent work!

  79. Boglenaut says:

    Interesting blog..hope you become a regular poster on Bogleheads as well.

  80. tipswatch says:


    Thanks for the great question. I am an advocate of buying TIPS and holding them to maturity. When you do that, you do have some safety. I agree that the base rate on TIPS is likely to increase in the future, since the rates are at historic lows right now, across all time periods.

    So yes, creating a ladder of TIPS issues makes a lot of sense. Some shorter maturity, those will roll over and you might get a higher rate. Some longer maturity, so you can get a higher rate now.

    If you are investing in a TIPS mutual fund, I would start with a very small initial investment and dollar cost average in. TIPS funds are at 5-year highs and are a bit risky … in my opinion.

  81. Joe Keenan says:

    Greetings, great blog. Questoin: as interest rates rise, as I assume they will in the next several years, won’t stated interest rates of tips increase with a corresponding reduction in value of tips issued at much lower interest rates? I am thinking of dollar cost averaging into tips to avoid this scenario. Last question, is it better sto tagger maturities or just go long. I donb’t have a cola on my pension, and need to hedge with tips. Sorry to burden you, but can find this info anywhere. Thanks. Joe Keenan

  82. Jeff Roth says:

    Thanks for your work.

    I want to receive your posts, but not particularly updated comments on each post.

    Did I check off the correct box below?

    Thank you,

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