6 Ways to Find Returns When Interest Rates Are Zero

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I agree with Marty. Also, everybody knows that the CPI-U to which TIPS are connected is massaged slightly by the Bureau of Labor Statistics. Hedonic adjustments and other statistical maneuvers result in an official reported inflation rate that is almost certainly somewhat lower than the true rate of inflation.
Therefore, TIPS provide a somewhat lower level of inflation protection than advertised.

Jason W of MA 2:08PM December 12, 2009

TIPs are not as safe as you and many other writes claim. In all likelihood, they will go down in price at rates rise. CDs bought at banks directly, not through brokerage firms, are also not such a bad idea in a rising rate environment because they can be redeemed with usually 3 or 6 month interest penalties. That is far less than one can expect to lose on bonds or bond funds if rates rise. On the other hand, if you are wrong, you can simply hold onto the CDs.

Marty of FL 11:22AM December 12, 2009