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Brinker - Bob Brinker's TIPS & I-Bond Advice from
March 18, 2012 Moneytalk Show
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Moneytalk Show Review Bob Brinker's Stock Market Update for 2012 March 18, 2012 |
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| March
18, 2012 Newsletter Excerpts - Editorial
Comment ("EC") by David Korn: Bob Brinker Fan Club Home Page - Bob Brinker's Asset Allocation History |
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I BONDS Caller: This caller purchased some I Bonds in October 2001 on Bob’s recommendation and the interest rate is still 3%? Bob said the base rate is still 3% but on top of that you are getting 3.06% inflation rate currently which means you are getting an annualized rate for the time being of 6.06%. The interest on those I-Bonds you can choose to defer all the way out to redemption which is what Bob recommends which means you have more money working for you now versus giving some of it to the IRS. EC (David Korn): As of January 1, 2012, paper bonds are no longer sold at financial institutions. So if you want an I Bond, you can purchase via TreasuryDirect or with your IRS tax refund. Kirk Here: The earnings rate for Series I Savings Bonds is a combination of a fixed rate, which applies for the life of the bond, and the semiannual inflation rate. You can now buy $10,000 per year online at TreasuryDirect.gov. See
Caller: This caller owns Inflation Protected Securities with Vanguard in her retirement account. |
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Kirk
Here: TIPS are short for
"Treasury Inflation Protected Securities." TIPS are
securities whose principal is tied to the Consumer Price
Index. With inflation, the principal increases. With
deflation, it decreases. When the security matures, the
U.S. Treasury pays the original or adjusted principal,
whichever is greater. Vanguard has a mutual fund,
VIPSX, that invests in TIPS and the iShares Barclays TIPS
Bond exchange traded fund symbol is TIP. for more
information, read TIPS
or Treasury-Inflation Protected Securities. Bob said at this time if he were a holder of Inflation Protected Securities he would sell them because the base rate has reached unattractive levels. EC (David Korn): The yield on Treasury Inflation Protected Securities is in negative territory; for 10-year TIPS the interest payments are hovering at negative 0.4%. I agree with Bob. Kirk Here: Only the 5 and 10 year TIPS have negative base rates. The 20 and 30 year TIPS still have positive base rates that pay inflation plus 0.42% and 0.83%, respectively. We update these rates monthly in "The Retirement Advisor:" Kirk Here: Bob Brinker sold the TIPS fund from his model portfolio #3 and "income portfolio" in January 2011. He also lowered his allocation to GNMAs . He used the funds raised in by selling VIPSX and VFIIX in his P3 to buy Vanguard's Wellington Income Fund, VWINX. In 2011, VWINX gained 9.6% . Here is how TIPS and GNMA performed:  Kirk Here: I didn't agree with Brinker last year so I added $30,000 in individual TIPS to my explore portfolio and even more to my personal portfolios on March 24, 2011. Today those are up 13.6%. Not a bad return for individual bonds that won't lose money and paid at the time a very nice positive base rate. Kirk Here: Bob Brinker used to call his "Income Portfolio" his "Fixed Income Portfolio." After the market nearly doubled from the 666 in 2009 to 1258, In January 2011, Brinker added a mutual fund that has a mixture of stocks and bonds (Vanguard Wellesley Income Fund - VWINX) to his "Fixed Income Portfolio." Some of us "critics" pointed out in blogs that this was no longer "fixed income" so he changed the name of the portfolio over the next two months. In his Feb. 2011 Marketimer he changed the name in the text and in March 2011 issue he changed the name on the table listing what is in the portfolio. We took great "pride" in "assisting" Brinker more accurately represent his portfolios! Kirk Here: My explore portfolio
is off to a great start too up 10.6% YTD as of 3/19/12
with ONLY 2/3rds in equities!!!!
Long
Term Results that Speak for Themselves
Since 9/30/98 inception, "Kirk's Newsletter Explore Portfolio" is UP 390% vs. the S&P500 UP only 51% vs. NASDAQ UP only 57% (All through 12/31/11) Subscribe NOW and get the March 2012 Issue for FREE! ! (Your 1 year, 12 issue subscription will start with next month's issue.) (More Info, Testimonials & Portfolio Returns) Top of page
Kirk
Here: David and I are very
proud of our performance for "The
Retirement Advisor:" Note how our
"most conservative portfolio, with zero stock
market exposure, made money every year. The
Brinkers can's say that about ANY of their "income
portfolios" in either of their two newsletters.
The Retirement Advisor
Portfolio Performance By Year Through December 31,
2011
CLICK HERE to download a FREE issue of "The Retirement Advisor."
Website for more information and annual Performance Data If you would like a free sample of David's complete Newsletter and his "Retirement Advisor" newsletter, then click this link to send an email request and please tell us a bit about yourself too. Return to: Bob Brinker Fan Club Home Page - Top of Page If you want updates
on what Brinker is saying on Moneytalk delivered
to your email box, often within 24 hours after
Sunday's show, then send us a note at TalkAboutMoney@gmail.com
and ask to get on our mailing list.
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