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http://www.publicdebt.treas.gov/sec/seciis.htm
Treasury Inflation-Indexed Securities
(TIPS)
If U.S. Treasury bills, notes, and bonds are the
world's safest investments -- and
they are -- then you might say Treasury Inflation-Indexed Securities
are the
safest of the safest. Why? Because their ultimate value cannot be
diminished
by inflation.
Treasury Inflation-Indexed Securities, often
called Treasury Inflation-Protected Securities or TIPS, are a
special
type of Treasury notes and *bonds. As with other notes and bonds, when
you own TIPS
you receive interest payments every
six months and a payment of principal when the security matures. The
difference is this: Interest and redemption payments for TIPS
are tied to inflation.
(NOTE: TIPS are one of two types
of inflation-indexed securities sold by the U.S. Treasury; the other
type is
<a
href="">Series I
savings bonds. As the title above suggests,
this page addresses only
TIPS.)
Principal
Based on the Consumer Price Index, the leading measurement of
inflation, we adjust the principal value of your TIPS. At
maturity we redeem the security at its inflation-adjusted principal
amount or
its original par value, whichever
is greater. In all likelihood, inflation will occur over the life of
the security
and our payment to you at redemption will be greater
than the original par value of the security.
For the unlikely event of deflation,
we built a safeguard into the system: our final payment to you cannot
be
less than the original par value.
Interest
Like other notes and bonds, TIPS pay
a fixed rate of interest. But this fixed rate of interest is
applied not to the par amount of the security, but to the
inflation-adjusted principal. So, if inflation occurs throughout the
life of your security, every interest payment will be greater than the
previous one. On
the other hand, in the rather unusual event of deflation, your interest
payments will decrease.
Specifically, each interest payment is calculated by multiplying
the inflation-indexed principal (regardless of whether it's
greater or less than the par
value) by one-half the interest rate determined at auction.
Purchase Options
You have four opportunities per year to buy TIPS from us.
We auction 10-year inflation-indexed notes in January, April, July,
and October. (The TIPS auctioned in April and October are
reopenings
of the ones originally auctioned three months earlier.)
As with other notes, we issue TIPS through <a
href="">TreasuryDirect
and the Commercial
Book-Entry System. In the Commercial Book-Entry System,
financial institutions or government securities brokers or dealers hold
the securities on your behalf. In TreasuryDirect, you hold the
securities directly with us.
Final Matters
Unlike other marketable Treasury
securities held in an account with us, TIPS can't be reinvested.
Of course, if you redeem
an inflation-indexed security, you can use the proceeds from the
redemption to buy a new security of any type.
Like other Treasury notes and bonds, TIPS are exempt from state
and local income taxes, and subject to federal
income tax. As for federal taxes, here's one other matter to consider:
In any year
when the principal of your TIPS grows, that gain is considered
reportable income for that year even though you won't receive
your inflation-adjusted principal until the security matures. If you
hold your TIPS in
TreasuryDirect,
we send you
two tax statements each year: an IRS Form
1099-INT showing the interest we paid you and a 1099-OID showing the
increase or decrease in the principal value of your security.
In the STRIPS
program, TIPS are eligible for stripping
in the Commercial Book-Entry System by authorized brokers and dealers.
Dan C wrote:
Dan
please give some examples of TIPS.
Thanks,
Dan
Dan Goncharoff wrote:
TIPS don't particularly care, which is the
point.
They will probably outperform gold in a deflationary environment.
I suggest you do some research about them.
Regards
DanG
Charles Meyer wrote:
<blockquote cite=""
type="cite">That's
assuming inflation of course. Bonds hate deflation. <font
face="Arial">chas
<blockquote
>
<div
>-----
Original Message -----
<div
>From:
<a title="TheGonch@xxxxxxxxxxx"
href="">Dan
Goncharoff
<div
>To:
<a title="realtraders@xxxxxxxxxxxxxxx"
href="">realtraders@xxxxxxxxxxxxxxx
<div
>Sent:
Thursday, March 18, 2004 7:47 AM
<div
>Subject:
Re: [RT] crude oil at 13 year high
Instead of T-Bills, consider TIPS (Treasury Inflation-Protected
Securities).
No maturities to roll over.
Regards
DanG
Charles Meyer wrote:
<blockquote cite=""
type="cite">
Cash,
(US T-Bills), Gold, or a combo of the two. Inflation or Deflation?
Keep a ratio chart of cash gold divided by the<font
face="Arial">30
year Treasury. This will show you the daily struggle of the two
forces;
and which one is currently winning battles. <font
face="Arial">Re
conspiracy; a famous supreme court justice once said (sorry I don't
recall
his name) not to mistake a conspiracy for<font
face="Arial">what
can be ascribed to simple incompetence; and of course there is a lot of
that inherent in bureaucracy. <font
size="-1">chas
<blockquote
>
<div
>-----
Original Message -----
<div
>From:
<a title="jwhite43@xxxxxxxxxxxx"
href="">Jim
White
<div
>To:
<a title="realtraders@xxxxxxxxxxxxxxx"
href="">realtraders@xxxxxxxxxxxxxxx
<div
>Sent:
Thursday, March 18, 2004 6:47 AM
<div
>Subject:
Re: [RT] crude oil at 13 year high
I just finished a book that
describes
what could happen in a full financial meltdown. It's a novel by James
Cook
called "Full Faith & Credit". Pretty scary but enlightening reading. <font
face="Arial">In
that vain, could some of you share your strategy for asset protection
and
profit should such an unwinding happen.I don't have one yet but am
beginning
the planning and would appreciate the thoughts of others. <font
face="Arial">Jim
<blockquote dir="ltr"
>
<div
>-----
Original Message -----
<div
>From:
<a title="BHEISLER@xxxxxxxxx"
href="">Bob
<div
>To:
<a title="realtraders@xxxxxxxxxxxxxxx"
href="">realtraders@xxxxxxxxxxxxxxx
<div
>Sent:
Thursday, March 18, 2004 3:18 AM
<div
>Subject:
Re: [RT] crude oil at 13 year high
This conspiracy stuff has been
discussed on this forum going back to the early bubble years in the
mid-90's,
and back then I subscribed to that theory too. I also believed that
the government was actively involved in propping up the stock market
but
after seeing what happened to the markets since the bubble popped I no
longer believe that either. <font
size="-1">I
think the questionable economic numbers we get are due mostly, if not
completely,
to the normal inefficiency and incompetence you get out of any massive
bureaucracy. Doesn't "CPI excluding food and energy" sound a lot
like "EPS of xx cents excluding one time charges that recur every
quarter"?
How about the headline Labor number we get every month that doesn't
include
independent contractors or the self-employed? But there's a Household
number that does include that number which is rarely mentioned, however
I suspect there are problems with how that number is calculated too. <font
face="Verdana">The
other item that argues against any meaningful "cooking of the books" is
that these massive government agencies are comprised of people from
both
parties, albeit mostly democrats. So it's hard to imagine they could
maintain a "cover-up" year after year and through different
administrations.
This would be especially true for a republican administration since the
media would be in an orgasmic frenzy to cover such a story. <font
face="Verdana">I
share the longer term negative view on the equity markets being
expressed
on this forum, but it's not because of any government
conspiracy....it's
because of what has transpired in previous post-bubble periods and the
length of time it took to truly and fully recover from a financial
bubble
(15-20 years).
<blockquote
>
<div
>-----
Original Message -----
<div
>From:
<a title="profitok@xxxxxxxxxxxxx"
href="">profitok
<div
>To:
<a title="realtraders@xxxxxxxxxxxxxxx"
href="">realtraders@xxxxxxxxxxxxxxx
<div
>Cc:
Mike
Burk ; <a title="ketayun@xxxxxxxxxxxxx"
href="">Kate
(E-mail) ; <a title="Jseaton357@xxxxxxx"
href="">Jseaton357@xxxxxxx
; <a title="urania@xxxxxxxxxxxxxxxx"
href="">Elizabeth
(E-mail) ; <a title="dcarter888@xxxxxxxxxxxxx"
href="">doroty.h
; <a title="dperrino@xxxxxxxxxxxxx"
href="">Dom
Perrino ; <a title="DELTA88343@xxxxxxx"
href="">DELTA88343@xxxxxxx
; Cyclesman
(E-mail) ; <a title="astrofin@xxxxxxxxxxxxxxx"
href="">astrofin@xxxxxxxxxxxxxxx
; Yacov
Twena ; <a title="bigschmo@xxxxxxxxxxxx"
href="">vincent
; <a title="u.Stuart-Auslander@xxxxxxx"
href="">U.
Stuart-Auslander@xxxx Net (E-mail) ; <a title="SLAWEKP@xxxxxxx"
href="">Slawek
(E-mail) ; Ronald
McEwan ; <a title="rginsat@xxxxxxxxxx"
href="">Ron
Miller (E-mail) ; <a title="panda2222@xxxxxxxxxxxxx"
href="">panda2222@xxxxxxxxxxxxx
; <a title="ntt-list@xxxxxxxxxxxxxxx"
href="">ntt-list@xxxxxxxxxxxxxxx
<div
>Sent:
Wednesday, March 17, 2004 9:41 PM
<div
>Subject:
[RT] crude oil at 13 year high
Hello <font
face="Arial">this
will filter into higher manufacture cost, transportation, and airlines,<font
face="Arial">(good
shorts,) corporate
earnings will decrease as cost increase,<font
size="-1">gov
stats on inflation today phony, <font
size="-1">payroll
employment decreasing, they
are keeping the # nice until elections,<font
size="-1">then
will drop the bomb with REAL numbers<font
size="-1">Ben
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