Yahoo Answers is shutting down on May 4th, 2021 (Eastern Time) and beginning April 20th, 2021 (Eastern Time) the Yahoo Answers website will be in read-only mode. There will be no changes to other Yahoo properties or services, or your Yahoo account. You can find more information about the Yahoo Answers shutdown and how to download your data on this help page.
Trending News
What are the advantages of treasury bonds over savings bonds? What about TIPS?
I know that savings bonds are for individuals, they are sold in smaller denominations, and you cannot sell them to someone else. I know that most other bonds can be transferred to others, but they are usually much more expensive and most individuals can't reasonably invest in them except by using a bond mutual fund.
I'm not sure why this would be worth it. Is there a higher return if you invest in those other kinds of bonds, rather than savings bonds?
Also, I know that TIPS are supposed to be extremely safe, and the only drawback I've read is that you should keep them in tax-deferred accounts. Are there other drawbacks? For instance, is the return lower than for other bonds?
Thanks!
2 Answers
- cactusgeneLv 78 years agoFavorite Answer
The advantage of a US Savings Bond is, that after a minimum 6 month holding period you can always redeem them and you NEVER get less than your purchase price.
Treasury bonds and corporate bonds are generally sold in denominations of $1,000 or higher. However, they are interest sensitive. When you try to sell them and market interest rates have risen, then the market price will be less than your purchase price. So to some extent bonds, just like stock can go up and down in price.
TIPS are safer than regular bonds because they have an inflation adjustment feature built in. But that protection come at a cost and the interest rate on these bonds is considerable lower than on regular bonds.
