Jul 13, 2022
As inflation continues to rise, many questions have come up regarding best practices for safeguarding your investments. This week on Grow Money Business Grant takes a deep dive into bond investing in an inflationary market, and answers some important questions about Treasury Inflation-Protected Securities (TIPS) and I-bonds. Throughout the episode, Grant shares his thoughts on when they may be a good fit for your portfolio, as well as some important considerations and strategic approaches to bond investing.
[04:07] Bond Investing – Grant explains the process of bond investing and the importance of allocating a portion of your portfolio to US government securities.
[08:44] Treasury Inflation-Protected Securities – Grant discusses the similarities and distinctions between ordinary US government securities and treasury inflation-protected securities.
[13:41] Interest Rate Risk – Grant explains why the value of TIPS are decreasing even though they are intended to protect investors against inflation.
[21:26] I Bonds – Grant describes the structure of I Bonds, and shares his thoughts on who is best suited to invest in them.
[25:48] $10,000 Limitation – Grant shares a strategic approach on how to circumvent the $10,000 per year per person investment limit that the Treasury Direct website imposes.
[29:00] Emergency Fund Cash – Grant explains why he does not recommend investing emergency fund cash in I bonds.
[32:50] Borrowings – Grant describes how rising inflation affects borrowing and how to benefit from borrowing in inflationary times.
Resources:
Treasury Direct: treasurydirect.gov/ Treasury Inflation-Protected Securities: wsj.com/market-data/bonds/tips
Treasury Inflation-Protected Securities: FAQs about TIPS: schwab.com/learn/story/treasury-inflation-protected-securities-faqs-about-tips