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|Should I invest in inflation-indexed treasuries?
By The-Adviser.com -
|New York -
Inflation-indexed Treasury securities are an
ideal way for investors who are concerned about inflation and are concerned about
principal loss. This includes individuals who are nearing retirement age or those in
retirement who to want to preserve the principal value of their investments but do not
want interest income eroded by inflation.
Treasury securities can be purchased in ten year periods in face values as low as $1,000. Interest is fixed at the date the security is purchased and is paid twice a year. The principal amount will increase with inflation and will be paid at the time the security matures. Also, as the principal increases, the total amount of interest received will also increase.
If possible, these investments should be held in tax-deferred accounts because taxes will be owed on the increase in value in the year it is credited even thought it is not actually paid until the security matures.
Inflation-indexed bonds should generally be held in tax deferred accounts.
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