I Bonds or TIPS

[Molly]

With inflation rising, which is the better investment, I Bonds or TIPS?

[Greg44]

My retirement person recommended we invest in I-bonds, she thought we had too much money in non-productive accounts (I agreed). I set up an account at the Treasury Direct website and have been starting small until I am comfortable with how it all operates. I just watched a good YouTube again on the differences between the I-bond and TIPS accounts and still like the I-bonds better for us. https://www.youtube.com/watch?v=bIq8XXo4Vfo

[dado potato]

I agree with Greg44 that the YouTube video by Jennifer accurately contrasts I Bonds and TIPs.

(I am not impressed by the "legal loophole" of spouses buying I Bonds for each other, as Jennifer describes).

I treat I Bonds as a last ditch reserve. Being in my 70s, either I or my spouse could need a lot of money for Long Term Care. Or a legal judgment could be awarded in excess of our liability insurance coverage. I buy the limit every year, generally in January.

On occasion I am a buyer of short-term TIPs funds, such as VPOIX at Vanguard, but these purchases have resulted in unrealized capital losses. As a discussion point, the losses are slight compared to the losses over the same period in the SP500, VNQ, NASDAQ, or a 60/40 allocated portfolio.

In my experience, each I Bond increases in value every month. There is no income tax payable until the owner cashes in the I Bond. No fuss, no muss.

The term on an I Bond (in effect) is 1-30 years, depending on the owner's option. You choose.

[Rogar]

For me I-bonds were the easiest to understand. I've had a couple of tips funds that never did well, although it could tun out differently in a different economy. If I were to buy tips, I'd buy the bonds at a duration I plan to hold to maturity rather than a bond fund. If I were uncertain how how each works and which as the best for my situation, I'd consult a professional adviser.

[Teacher Terry]

I bought I bonds the past two years.