I am planning to load up on TIPS and build out my TIPS ladder further as part of buildout of bridge to SS. Now before I do that, I want to confirm my understanding of TIPS and make sure I know what to expect.
(1) When I go to tipsladder.com and build out the TIPS ladder, it shows me XIRR of 2.55% for the ladder. Am I correct in understanding that means that if I buy at the prices shown and hold each rung to maturity, I am guaranteed to earn 2.55% over inflation on the dollars invested into the ladder (assuming also that I invest the coupons along the way at the same real yield as when I buy them)?
(2) If my understanding of (1) is correct then as long as 2.55% real yield is good enough for me, I am ok loading up on TIPS irrespective of what happens to real yields going forward?
(3) I bought TIPS CUSIP 912810RA8 maturing 2/15/43 at (unadjusted) price of 75.4 and inflation index of 1.372 on 12/17/24 for cost of $1,034.48. Today its market value is $978, so it is doing what marketable securities do unlike (my favorite) I-Bonds! Now assuming it matures tomorrow (just hypothetically so I can confirm my expectations for what will happen at maturity), I should expect to be paid out 1000*100/100*1.372=$1,372 (par value multiplied by unadjusted price multiplied by inflation index)?
Thank you for helping me continue to learn TIPS and increase my conviction if increasing allocation to TIPS ladder.
(1) When I go to tipsladder.com and build out the TIPS ladder, it shows me XIRR of 2.55% for the ladder. Am I correct in understanding that means that if I buy at the prices shown and hold each rung to maturity, I am guaranteed to earn 2.55% over inflation on the dollars invested into the ladder (assuming also that I invest the coupons along the way at the same real yield as when I buy them)?
(2) If my understanding of (1) is correct then as long as 2.55% real yield is good enough for me, I am ok loading up on TIPS irrespective of what happens to real yields going forward?
(3) I bought TIPS CUSIP 912810RA8 maturing 2/15/43 at (unadjusted) price of 75.4 and inflation index of 1.372 on 12/17/24 for cost of $1,034.48. Today its market value is $978, so it is doing what marketable securities do unlike (my favorite) I-Bonds! Now assuming it matures tomorrow (just hypothetically so I can confirm my expectations for what will happen at maturity), I should expect to be paid out 1000*100/100*1.372=$1,372 (par value multiplied by unadjusted price multiplied by inflation index)?
Thank you for helping me continue to learn TIPS and increase my conviction if increasing allocation to TIPS ladder.
Statistics: Posted by life_force_prana — Mon Jan 13, 2025 5:58 pm — Replies 3991 — Views 943911