Like when you make any other investment, you want to buy TIPS when prices are low and yields are high. There are several places where you can monitor the TIPS market.

Wall Street Journal, TIPS Market Data. This web page from the Wall Street Journal shows yield on specific issues of TIPS. It's updated once a day after the market closes. It also keeps an archive of the prices and yields in the past. The prices on this page use the 1/32 convention. 99.01 means 99 plus 1/32 which equals 99.03125 in decimal.

Bloomberg, Government Bonds. Instead of showing the yield on every TIPS issue, this web page from Bloomberg lists yield for only four issues as a representative sample. It's updated in real time when the market is open.

U.S. Treasury, Daily Treasury Real Yield Curve Rates. This web page from U.S. Treasury lists constant maturity yields for four maturities. The yields are extrapolated to exactly 5 years, 7 years, 10 years, and 20 years even if there are no actual bonds that mature at those exact marks. The data are updated daily after the market closes.

Federal Reserve Bank of St. Louis, charts for 5-year, 10-year, and 20-year TIPS yield. Using the same constant maturity yields data from U.S. Treasury, these charts show where the yields have been in the recent past. Because the Treasury changed their extrapolation methodology recently on December 1, 2008, historical comparison crossing the 12/01/2008 date isn't as meaningful as otherwise. The charts are updated daily with a few days of lag from the U.S. Treasury data.

Depending on whether you are watching for specific issues of TIPS or the market in general, or whether you want real-time or 1-day delayed data, you may find one data source better than another for what you need. Keep in mind all those prices and yields are for the wholesale market. Prices from a retail broker will be higher due to the broker's markup.

The question "Is it a good time to buy TIPS now?" can only be answered by you. Like the stock market, the bond market is also unpredictable. Some people say the bond market is even more efficient than the stock market because there are fewer unknowns. Whatever you can calculate, the bond dealers can also calculate. They do it must faster. If you think the yields are good now, they may become better tomorrow. If you think the yields are too low now, they may become even lower. Respected author Larry Swedroe suggested a shifting strategy in his books The Only Guide to a Winning Bond Strategy You'll Ever Need and The Only Guide to Alternative Investments You'll Ever Need. He also shared this shifting strategy in his post on the Bogleheads forum.

I agree it's a good time to buy TIPS when the yield goes above 3.0% although I've also bought when the yield was between 2.0% and 3.0%. It's up to you whether you use Mr. Swedroe's shifting strategy or not.

Another common question about when to buy TIPS is "Should I buy on the secondary market now or wait for the next auction?" It's a difficult question to answer because nobody has a crystal ball for what the yield will be when the next auction comes around. Let me give a few of points for consideration.

1. Are the yields on the secondary market very attractive now or just so-so? When you pay a markup on the secondary market, the yield had better be worth it. If it's nothing spectacular, you might as well wait for the next auction.

2. When is the next auction for the bond you want? Look at the auction schedule and see what will be auctioned and when. If you want a 20-year bond but the upcoming auctions are for 5-year and 10-year, you will have to wait a bit longer for the auction. By that time the good yields may not be available any more. Or if you want a 8-year bond but they only auction 5-year, 10-year, and 20-year bonds, then you have no choice but to buy on the secondary market. On the other hand, if you want a 10-year bond and one is coming up for auction next week, it makes sense to wait for the auction because you will get institutional pricing when you buy from the auction.

3. How much more do you pay when you buy on the secondary market? The retail markup is not constant. It varies by time, from broker to broker, and from bond to bond with the same broker. The markup increased dramatically during the market turmoil in 2008. Use my spreadsheet and find out your all-in price and yield including broker commission. Unfortunately without access to a Bloomberg terminal, there is no good source for real time wholesale market data. You can estimate how much more you are paying over the wholesale prices in a few ways, although none of these methods is perfect.

• Pick a bond that Bloomberg tracks on its web site. Find the retail pricing for that same bond from your broker. Compare the two.
• Compare the current retail price and yield for the bond you want with yesterday's wholesale price and yield as reported by Wall Street Journal.
• Use the average of your broker's bid price and ask price as the proxy for the market price. See how much the ask price is higher than the midpoint between the bid price and the ask price.

Because you pay wholesale pricing when you buy from an auction, the market will have to change that much to your disadvantage for you to be worse off if you wait for the auction.

Let me give a real life example. I was interested in buying a 20-year TIPS in early January 2009. At that time, Fidelity showed the ask price at 127.434 and the ask yield at 2.192% for a TIPS maturing on April 15, 2029. Because Fidelity doesn't charge commission on top of its markup, I can use the ask price and the ask yield as-is. Wall Street Journal showed as of the previous day's market close, the ask price on the wholesale market for the same bond was 125-17/32, which equals to 125.53125 in decimal, and the ask yield was 2.295%. So I estimated that I would pay a markup of 127.434 / 125.53125 - 1 = 1.5% if I bought on the secondary market. Meanwhile the auction schedule showed the next auction for a 20-year TIPS was going to be on January 26, 2009, less than a month away. Because the 2.2% - 2.3% real yield wasn't attractive enough for me to pay a 1.5% markup while the auction was coming up shortly, I decided to wait until the next auction.

Of course until the auction came, the yield may have dropped to below 2.0%. That was the risk I had to take when I made this "buy now or wait" decision. The actual result from the January 26, 2009 auction came to 2.50%. Waiting for the auction turned out to be the right decision. At other times I've also made the wrong decisions: buying too soon or holding out for better yield but the market went the other way. It's very difficult to predict what the market will do.

In general I will consider buying on the secondary market if (a) the yield is attractive; (b) there isn't an auction coming up for the bond I want; and (c) the retail markup is below 0.5%.