Post #868 by hedgehog444 on the Retirement Investing board

Personal Finance Topics / Retirement Investing

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Perhaps someone can explain the advantage of TIPS over boring 4-week T-Bills? I suspect it is a fault in my mental model but I see short-term T-bills as being just as responsive to actual inflation as the TIPS would be without any of the messiness of resetting the principal. Tbills are earning close to 4% whereas recently even the 30yr TIPS are yielding 2.375% and the 5yr are only yielding 1.125%. I get that you pay taxes on the interest on TBills but you do that as well with TIPS and you also pay taxes on the imputed increase in the principal, so that would also seem to be a wash?

What am I missing?

Thanks,
HH/Sean

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