I’ve read that the fixed interest on tips held in a tira go directly to the sweep account monthly, the biannual inflation adjustment is added to the bonds balance. I’m attempting to understand how this works for the life of the bonds..
As the bonds value fluctuates during it’s life time am I correct in my understanding of how this works in this example, all figures are just made up.
One buys 10 $1k 10 year bonds at auction. After settlement the bonds show up in your tira at a balance of close to $10k with a coupon of 2%.
If the value of the bonds drop during the month to say to $9700 do you get monthly interest on the current value or the original amount?
Now let’s say it continues at $9700 till the first inflation adjustment is made, do the bonds get the adjustment on the original value or the current value?
I saw where at maturity if the bonds balance is less than the original value you get the original plus inflation adjustments, if it’s higher you get that higher value plus inflation adjustments. Come maturity does one get the original Yield to Maturity on the final (original or higher) value or the accumulated payments in the sweep?
Same for the inflation adjustments, do you get the accumulated adjustments based whatever the balance was when the adjustments were made, or a total of all inflation on the final balance?
I take it the monthly interest payments do not get the inflation adjustments.
As the bonds value fluctuates during it’s life time am I correct in my understanding of how this works in this example, all figures are just made up.
One buys 10 $1k 10 year bonds at auction. After settlement the bonds show up in your tira at a balance of close to $10k with a coupon of 2%.
If the value of the bonds drop during the month to say to $9700 do you get monthly interest on the current value or the original amount?
Now let’s say it continues at $9700 till the first inflation adjustment is made, do the bonds get the adjustment on the original value or the current value?
I saw where at maturity if the bonds balance is less than the original value you get the original plus inflation adjustments, if it’s higher you get that higher value plus inflation adjustments. Come maturity does one get the original Yield to Maturity on the final (original or higher) value or the accumulated payments in the sweep?
Same for the inflation adjustments, do you get the accumulated adjustments based whatever the balance was when the adjustments were made, or a total of all inflation on the final balance?
I take it the monthly interest payments do not get the inflation adjustments.
Statistics: Posted by Padlin — Fri Jan 17, 2025 4:52 pm