BOND ETFs (T.I.P.S.) with Inflation Protection and 6.79% Interest Rate

by | Mar 28, 2023 | Invest During Inflation | 16 comments




This BOND ETF provides 6.79% in interest and helps protect your portfolio against Inflation. It is part of a group of bonds called T.I.P.S. Which stands for Treasury inflation protected Securities.

Unlike normal bonds, these bonds actively adjust their value in accordance to inflation, and serve as an excellent hedge, or protection for your portfolio against inflation.
The amazing part is that the original bond value will INCREASE rather than Decrease when interest rates are raised.

This ETF holds a variety of TIPS and provides investors with an excellent source of fixed income.

0:00 Introduction to TIPS
0:29 Equity Investments
0:43 Fixed income Investments
0:55 Why Bonds?
3:19 Selling Bonds on secondary markets
3:34 TIPS (Treasury Inflation-Protected Securities)
4:28 SPIP – Bond ETF
5:40 Comparing SPIP to SP500
6:05 Downside of TIPS bond

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Many investors are familiar with the concept of bonds as a relatively safe investment option. However, with inflation on the rise, traditional bond investments may not be enough to keep pace with the cost of living. This is where Inflation Protected Bond ETFs (T.I.P.S.) come in, offering a potential solution for investors looking for safety and inflation protection.

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The name says it all – T.I.P.S. ETFs are designed to provide investors with protection against inflation by adjusting the value of the bond to track changes in the consumer price index (CPI). This means that as inflation rises, the value of the bond will also increase, protecting the investor’s purchasing power.

One popular T.I.P.S. ETF is the iShares TIPS Bond ETF (TIP), which has a current yield of 0.70% and a 6.79% interest rate. This means that the bond is paying out a 6.79% coupon on a face value of the bond, making it an attractive investment option for those looking for both safety and potential returns.

Another advantage of T.I.P.S. ETFs is that they are diversified, meaning that investors can invest in a range of bonds with varying maturities and credit ratings. This helps to spread the risk and potentially reduce the impact of any defaults or credit events.

It’s worth noting that T.I.P.S. ETFs are not immune to interest rate risk, meaning that if interest rates rise, the value of the bond may decrease. However, the inflation protection provided by the T.I.P.S. ETF can help to offset some of this risk.

In addition to the iShares TIP Bond ETF, there are other T.I.P.S. ETFs available to investors, such as the Vanguard Short-Term Inflation-Protected Securities ETF (VTIP) and the Schwab U.S. TIPS ETF (SCHP).

It’s important for investors to carefully consider their investment goals and risk tolerance before investing in any ETF, including T.I.P.S. As with any investment, there are always risks involved, and past performance may not be indicative of future results.

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In summary, for investors looking for a safe investment option that can also provide some inflation protection and potential returns, T.I.P.S. ETFs may be a good option to consider.

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16 Comments

  1. J H

    What would your choice be between SPIP and JEPI?

  2. joe smith

    TIPS are much more attractive this year than last year. I wonder with the market going down whether people will pile into the bond market driving yields down and prices up

  3. DEREK J.

    And if you Add a payable on death or another assignee to your account you increase the FDIC insurance by another 250000

  4. Gary Schmelzer

    What are some safe bonds to invest in? I believe right now I’m going to continue to put money into my brokerage account but I’m not gonna be purchasing for a while.

  5. Chad T. Cantara

    I'm 52, own a home already and intend retiring/working much less in 5 years, my goal is buying a vacation home, and having dividends afford my lifestyle after retirement. I know this is possible, but inflation seems a threat, alongside bank crisis, I'm totally clueless on what next.

  6. Rocky_Balboa

    I'm 52, own a home already and intend retiring/working much less in 5 years, my goal is buying a vacation home, and having dividends afford my lifestyle after retirement. I know this is possible, but inflation seems a threat, alongside bank crisis, I'm totally clueless on what next.

  7. Rocky_Balboa

    I'm 52, own a home already and intend retiring/working much less in 5 years, my goal is buying a vacation home, and having dividends afford my lifestyle after retirement. I know this is possible, but inflation seems a threat, alongside bank crisis, I'm totally clueless on what next.

  8. Boa Son

    In my opinion, now is possibly one of the best times in history to purchase bonds. The Federal Reserve has been aggressively printing money, which has generated significant profits for us. It's time to show some support to the UncleSam by purchasing bonds while they are priced low, can be profitable for both sides.

  9. Thomas Hardy

    Looks like a good investment vehicle for these times. Thanks

  10. Scott Salyer

    Can someone tell me if my money is safe in chase?

  11. DekeRadio

    Here for the "byyyyeeeee!"

  12. nube negra

    Anyone know her o f?

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