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Avoid TIPS ETFs - Bond ETFs Facing Major Issues!


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Bond ETFs or exchange-traded funds that invest in bonds have been a popular choice among investors looking for passive income streams without the headaches of holding individual bonds. However, there is a big problem lurking in the bond ETF market: TIPS or Treasury Inflation-Protected Securities ETFs. TIPS ETFs invest in inflation-protected bonds issued by the US Treasury, which means their interest payments and principal amounts adjust with inflation. While this might seem like a safe bet, it is not always the case. The first problem with TIPS ETFs is that they are heavily influenced by interest rates, which tend to rise when inflation expectations go up. As a result, if interest rates go up, TIPS ETFs can suffer significant losses in market value, even if the bonds they invest in are still paying their promised interest and principal amounts. The second problem with TIPS ETFs is liquidity. Unlike other bond ETFs, TIPS ETFs are not traded as actively, which means there may not always be enough buyers or sellers in the market to match your orders. This could lead to pricing inefficiencies, especially during times of high market volatility. Finally, TIPS ETFs are often more expensive than other bond ETFs. They tend to charge higher expense ratios, which can eat away at your returns over time. So, what should investors do? Avoid TIPS ETFs altogether. Instead, consider investing in other bond ETFs or individual bonds that offer better liquidity, lower costs, and less exposure to interest rate risk. Overall, while bond ETFs can be a great way to diversify your portfolio and generate passive income, TIPS ETFs are not worth the risk, and should be avoided by cautious investors. https://inflationprotection.org/avoid-tips-etfs-bond-etfs-facing-major-issues/?feed_id=90399&_unique_id=6444320c27679 #Inflation #Retirement #GoldIRA #Wealth #Investing #bondetfs2022 #bondetfsexplained #bondetfsvsindividualbonds #bondsexplained #howtoinvest #inflation #investingforbeginners #InvestmentIdeas #learntoinvest #ltpz #ltpzetf #optimizedportfolio #schp #schpetf #stip #stipetf #stockmarket #tipetf #tipetfs #tips #tipsbonds #tipsetf #tipsetfs #treasuryinflationprotectedsecurities #vtip #vtipetf #TIPSBonds #bondetfs2022 #bondetfsexplained #bondetfsvsindividualbonds #bondsexplained #howtoinvest #inflation #investingforbeginners #InvestmentIdeas #learntoinvest #ltpz #ltpzetf #optimizedportfolio #schp #schpetf #stip #stipetf #stockmarket #tipetf #tipetfs #tips #tipsbonds #tipsetf #tipsetfs #treasuryinflationprotectedsecurities #vtip #vtipetf
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