5-year TIPS available Monday, October 23

Thursday, October 19th, 2006
Categorized as: Yesterday's News (old post archive)

The Treasury announced today it will re-open April’s 5-year TIPS at auction on Monday, October 23. This provides investors an opportunity to invest in these TIPS for the four and a half remaining years of their term.

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. Experienced I bond investors may be interested in Tuesday’s auction.

These 5-year TIPS have a coupon interest rate of 2.375%. However, the market rate on 5-year TIPS is currently above 2.5%. If those rates hold, the final price on these TIPS will be less than their $1,000 nominal value. Daily Treasury Real Yield Curve Rates is a web page the Treasury updates daily with current calculated yields for specific TIPS terms.

To purchase TIPS at the auction, log on to your TreasuryDirect account and place an order before Monday. 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.

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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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