Is it better buying "TIPS" through one's bank, or directly from the government's web site?

Question

What are the advantages and disadvantages for each method of purchase?

Answer 1

What are "TIPS"?

Answer 2

First of all you need to check with your bank and find out what fees if any they charge for such a purchase.  Some banks may not charge a fee.   I know that some brokers do not if the bonds are purchased directly from the government.  The main drawback of purchasing directly from the government is I imagine not being able to sell them in the after market if you should wish to. If you buy through your bank or through a broker, they can be sold at a moment's notice should the need arise.

There is one really big drawback to buying TIPs that you need to be aware of.  The inflation portion of the bonds is not paid until maturity, BUT it is taxed annually.   Of course if you hold them in a Roth IRA account, there is not tax.  

Answer 3

It makes no sence to buy them through the bank. Hi fees. And no service.......

Banks and brokers that do not "charge a fee" actually do as a mark up of the cost of the security. No financial (for profit) company sells any treasury bill/bond for free. None!

TIPS make a good addition to a well balanced portfolio.  They represent a very conservitive side and should be a smaller part of your portfolio the younger you are.

As a general rule;

Never by investment products from banks or insurance companies.

Answer 4

Directly from the government, go to the website. If you buy through a bank you will be charged a mark up fee and maybe other costs. A broker will also charge trading fees.

Answer 5

It would most likely be at a more beneficial price to buy them directly from the governement. Unfortunately most peoples personal accounts do not allow for them to buy them directly from the government. Odds are that you will have to go through your bank or brokerage to purchase these securities at a slightly higher (marked) level