Comments on: Tax-Exempt Investments: The Best Opportunity Now http://emptormaven.com/2008/09/tax-exempt-investments-the-best-opportunity-now/ Oiling the Gears of Capitalism with Information Tue, 09 Mar 2010 14:36:42 -0500 http://wordpress.org/?v=2.8 hourly 1 By: EmptorMaven » Blog Archive » Investing for Inflation Protection http://emptormaven.com/2008/09/tax-exempt-investments-the-best-opportunity-now/comment-page-1/#comment-1216 EmptorMaven » Blog Archive » Investing for Inflation Protection Mon, 28 Dec 2009 00:18:29 +0000 http://consumermaven.wordpress.com/?p=91#comment-1216 [...] Last year I recommended TIPS funds as particularly attractive for tax-exempt investment accounts. [...] [...] Last year I recommended TIPS funds as particularly attractive for tax-exempt investment accounts. [...]

]]> By: federalist http://emptormaven.com/2008/09/tax-exempt-investments-the-best-opportunity-now/comment-page-1/#comment-452 federalist Mon, 17 Aug 2009 14:18:21 +0000 http://consumermaven.wordpress.com/?p=91#comment-452 <a href="http://online.wsj.com/article/SB125021658485031221.html" rel="nofollow">WSJ notes that the TIPS market is currently relatively small, and therefore inefficient</a>. As a result TIPS index funds may miss opportunities actively managed funds can capture. Vanguard offers only an active TIPS fund (VIPSX). However <a href="http://online.wsj.com/article/SB125000800918523015.html" rel="nofollow">responding to demand from foreign investors the Treasury Department plans to expand issuance of TIPS</a>. WSJ notes that the TIPS market is currently relatively small, and therefore inefficient. As a result TIPS index funds may miss opportunities actively managed funds can capture. Vanguard offers only an active TIPS fund (VIPSX).

However responding to demand from foreign investors the Treasury Department plans to expand issuance of TIPS.

]]> By: federalist http://emptormaven.com/2008/09/tax-exempt-investments-the-best-opportunity-now/comment-page-1/#comment-241 federalist Wed, 06 May 2009 19:54:06 +0000 http://consumermaven.wordpress.com/?p=91#comment-241 <a href="http://online.wsj.com/article/SB10001424052970204830304574139532633748784.html" rel="nofollow">This WSJ article</a> cautions that although TIPS' value should rise with inflation, interest rates also tend to go up during inflation, and that would counteract some of the appreciation to TIPS (which produce income based on both their coupon payment and their inflation-linked principal adjustment). It is also possible to take a loss on both components: <blockquote> Between July 1980 and July 1981, interest rates rose to about 15% from 10% while the CPI fell to 10% from 14%. The result: a “perfect storm” that could have sent TIPS down by about 20%. </blockquote> This WSJ article cautions that although TIPS’ value should rise with inflation, interest rates also tend to go up during inflation, and that would counteract some of the appreciation to TIPS (which produce income based on both their coupon payment and their inflation-linked principal adjustment). It is also possible to take a loss on both components:

Between July 1980 and July 1981, interest rates rose to about 15% from 10% while the CPI fell to 10% from 14%. The result: a “perfect storm” that could have sent TIPS down by about 20%.

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