Question Hello Paul!
I'm thinking about investing in some TIP (Treasury Inflation Protection) Funds. Are these pretty reliable over the long term? I've read a few articles that these could drop if interest rates rises. I would think inflation would eventually go up over time. I'm not sure what to believe. Please help.
Answer Thank you for your question!
Yes, every investment will have its opponents and proponents. It is always hard to read through all that to find what fits you the best.
TIPS are very safe investments. The drawback is that the returns are very low. The one hard and fast rule of investing is this: The higher the return you are looking for, the more risk you must take on. If you are a very conservative investor, and are simply looking for a safe place to park your savings and earn a small return (very small), then TIPS work.
It is true that the price of these could go down. But you are really after the dividend payments for a bond fund, so that offsets the reduction in price. And these are inflation adjusted, as you note. So, consider TIPS about the safest type of investment you can get.
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