About a month ago I took the plunge and bought 30 Year TIPS bond to add to my long term bond portfolio. I only bought $25k because I am trying to pace myself with 10 Year TIPS and 5 Year TIPS and I’m not even sure if I’ll be alive 30 years from now but I did want to lock in a seemingly good rate.
The difficult thing about TIPS is picking the right time to buy these types of bonds. The essential question to ask with these bonds is if inflation will be higher in the future or not. If inflation will be higher, you want to own these bonds as they will outpace inflation. If however inflation will drop, you don’t want to be holding on to too many of these types of bonds.
The image below has the upcoming auctions for 5 and 10 Year TIPS.
On Thursday on March 21, the 10 Year TIPS will auction off followed by a 5 Year TIPS in April. The question is buy now or wait? The CPI report for February came in hotter than expected and with so many structural debt problems, it’s hard to see how inflation won’t continue to remain high.
10 Year TIPS Chart
5 Year TIPS Chart
The 5 year and 10 year TIPS charts are shown above and it seems tempting to think we may have peaked back in October of 2023 but recent inflation data may change all that so what to do?
I may end up waiting since inflation seems to be climbing back up and it would be worth it to wait. My goal for this year is to add at least $100k in TIPS bonds and with $25k in 30 year TIPS and additional $10k in 5 year TIPS completed this year, I am a third of the way to building my TIPS bond ladder.
I also continue to DRIP the dividends from TLT into accumulating more TLT and that has been growing nicely. I will also continue to read my favorite bond blogger www.tipswatch.com for some tips.
If you want to learn more about Bonds, I encourage you to check out my resources page.
UPDATE: This morning I decided to pull the trigger and put order in for $10k worth of 10 Year TIPS.
What changed my mind was the 2.004% yield which is close to all time highs. If it does go higher then I’ll buy another $10k in May or July or split the difference and buy $5k at each.