Expert: Doug Ingram - 10/16/2005

Question
Hi Doug, I read that I bonds are going to be paying between 6.69$ and 7.49% starting November 1. How do they compare with TIPS? Which is better?

Where and How are they purchased? Can they be held in IRA accounts?

Thanks for your help, Doug.

Cindy  

Answer
http://www.publicdebt.treas.gov/sav/sbiinvst.htm

The current rate on I Bonds is 4.8%
The rate would go up if inflation goes up.
Most of the inflation right now is simply higher energy costs.

You can buy them direct or from any Federal Reserve bank.

You can hold them in IRA or other accounts.

Your IRA broker can buy them for you.

TIPS are Treasury bonds with inflation protection.
Minimum denominations are usually $10,000 or higher.

Savings bonds are easier access for individuals.

I don't think of one or the other being "better".

The TIPS would be more liquid (if you needed to sell them before maturity).


Here's a non-Govt information page.
http://savingsbonds.com/