20-year TIPS available Tuesday, January 23

Friday, January 19th, 2007
Categorized as: Yesterday's News (old post archive)

The Treasury will offer 20-year TIPS at auction on Tuesday, January 23. Like Series I Savings Bonds, TIPS are a Treasury-issued inflation-protected security. Among their many differences, TIPS typically have a higher base interest rate than I bonds.

Only very experienced investors should particpate in this auction. 20-year TIPS are extremely volatile; moreover, you can currently get higher yields on 5- and 10-year TIPS.

To purchase TIPS at the auction, log on to your TreasuryDirect account and place an order before the 23rd. TIPS are available in $1,000 increments.

As a TreasuryDirect investor, you won’t actually place an auction bid. Large financial institutions do that outside of TreasuryDirect. However, you will receive the amount of TIPS you order at the highest interest rate determined in the auction. The actual price, yield, and rate of the investment won’t be known until after the auction.

However, as of yesterday, the Treasury calculated the 20-year yield of outstanding TIPS at 2.50%. Daily Treasury Real Yield Curve Rates is a web page the Treasury updates daily with current calculated yields for specific TIPS terms.

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FDIC Insured Certificates of Deposit can pay 1 or 2% more than savings bonds when held for a similar length of time. See top CD Rates Below:

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