I bonds were extremely popular when inflation was high, but now that inflation is declining, the new rate for I bonds in May 2023 will probably be less than 4%.
This video will cover why the 30-year TIPS that will be issued in August 2023, which will have some of the same features of I bonds, including 6-month adjustments for inflation, will be a much better deal.
With interest rates high, the stock market probably is not going to do well in 2023.
However, there is 1 security that will do better than most of the rest, the 30-year Treasury Inflation-Protected Securities, otherwise known as TIPS, because it not only offers significant interest and adjustments to principal according to inflation but has the greatest potential for capital gains, even better than the stock market.
This video will explain why, and why the 30-year TIPS, and not the shorter-term issues, has the greatest potential for capital gain.
And no! You don’t have to hold it for 30 years to earn this money.
If the economy enters a recession, then you may profit sooner than you think!
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I Bonds, New Rate for May 2023: 3.79%. 30-Year TIPS vs I Bonds. Why TIPS Are Better Investments!
I Bonds, also known as inflation-linked savings bonds, are a popular investment product issued by the U.S. government. These bonds are designed to protect investors from inflation by adjusting the interest rate to reflect changes in the Consumer Price Index (CPI). The new rate for May 2023 is 3.79%.
While I Bonds provide a good hedge against inflation, they are not as good an investment as Treasury Inflation-Protected Securities (TIPS). TIPS are also issued by the U.S. government, but they are structured differently and offer better long-term returns.
The main difference between I Bonds and TIPS is their maturity date. I Bonds mature after thirty years, while TIPS can have a maturity of up to thirty years. This means that investors can hold TIPS for a longer period and benefit from compound interest.
Additionally, TIPS offer a higher interest rate than I Bonds. A 30-year TIPS bond, for example, currently yields around 1.5%, compared to I Bonds with a current yield of 3.79%. However, TIPS provide greater returns over the long term due to their longer maturity.
Another advantage of TIPS over I Bonds is that they are more liquid. TIPS can be bought and sold on the secondary market at any time, while I Bonds can only be sold after they have been held for at least one year.
Furthermore, TIPS have a better credit rating than I Bonds. The U.S. government guarantees the principal and interest payments on both I Bonds and TIPS. However, TIPS are backed by the full faith and credit of the U.S. government, while I Bonds are only backed by the Treasury.
In conclusion, while I Bonds offer investors protection against inflation, they are not as good an investment as TIPS. TIPS offer higher returns over the long term, greater liquidity, and a better credit rating. Therefore, investors who are looking for a safe and reliable investment should consider TIPS over I Bonds.
what about one of the TIP ETF's ? Like TIP= Ishares VTIP= Vanguard SCHP= Schwab TIPS= Pimco?
Would you recommend buying I Bonds going into rest of 23 ? Will a long term treasuty ETF/ TLT make better sense ?
Can non-US citizens buy this 30yrs TIPS?