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Where Can You Buy TIPS Print E-mail
Written by TFB   
Last Updated on April 07, 2009
If you are interested in TIPS, where can you buy them? You can buy TIPS in several different ways.

1. Mutual Funds. Just like there are mutual funds for stocks and other bonds, there are also mutual funds for TIPS. The mutual fund buys many TIPS bonds. You buy shares in the mutual fund. You own TIPS indirectly through the mutual fund. The mutual fund manager decides which bonds to buy and when to buy and sell. Like in any other mutual fund, the mutual fund charges you a percentage of assets for its service. The mutual fund company sets the initial minimum investment, usually a few thousand dollars. For more details about TIPS mutual funds, read the articles in the Mutual Funds and ETFs section.

2. ETFs. There are also Exchange Traded Funds (ETFs) for TIPS. ETFs work similarly to mutual funds, except you need a brokerage account to buy and sell ETFs. ETFs trade all day whereas mutual funds price their shares once a day after the market closes. You will have to pay commissions for buying and selling ETFs unless your brokerage account gives you free trades. For more details about TIPS ETFs, read the articles in the Mutual Funds and ETFs section.

3. TIPS Auction. The Treasury Department sells TIPS to the public several times a year by auctions. If you invest in a taxable account, you can buy TIPS directly from the U.S. Treasury through its TreasuryDirect program. If you invest in an IRA, you have to use a brokerage account because the U.S. Treasury is not in the business of being an IRA custodian. For more details about TIPS auctions, read the articles in the Auctions section.

4. TIPS on Secondary Market. After the TIPS are sold by auctions, investors trade them with each other. This is called the secondary market. Prices on the secondary market change all the time. You need a brokerage account to buy TIPS on the secondary market. You pay whatever the prevailing price is, plus your brokerage firm's markup and commission. For more details about TIPS on the secondary market, read the articles in the Secondary Market section.

The table below summarizes the various ways you can buy TIPS.

  Mutual Fund Company Brokerage Account TreasuryDirect
IRA      
TIPS Mutual Fund X X  
TIPS ETF   X  
Individual TIPS - Auction   X  
Individual TIPS - Secondary Market   X  
Taxable Account      
TIPS Mutual Fund X X  
TIPS ETF   X  
Individual TIPS - Auction   X X
Individual TIPS - Secondary Market   X  

 
 

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