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Dutch
02-25-2011, 11:02 AM
I have a small 401 k plan and just became aware that there is an option for investing in an inflation protected securities fund. I'd never heard of these before, but due to the fact that I think inflation will be rising over the next few years i would like to invest some of my plan there. What are the risks or down side to such a fund?

thanks

Dutch
02-25-2011, 11:42 AM
thanks but I think this is something different norman -

https://personal.vanguard.com/us/FundsSnapshot?FundId=0119&FundIntExt=INT

Dutch
02-25-2011, 11:48 AM
are there no bonds other than US Government bonds that are backed by the full faith and credit of the US government?

Dutch
02-25-2011, 11:52 AM
no I really dont know - doesnt the US government back other bond funds like munis and gm and such?

Dan McCosh
02-25-2011, 11:58 AM
The U.S. government backs certain bank accounts and US treasuries.

Dutch
02-25-2011, 12:01 PM
ok - just found this in the prospectus





The Fund emphasizes inflation-indexed bonds issued by the U.S. government,
although it may also purchase inflation-indexed bonds issued by agencies and
instrumentalities of the U.S. government and by corporations.


they say 80% is in US Issued treasuries

what agency of the us government would be able to issue a bond?

Dutch
02-25-2011, 12:14 PM
not sure at all when the government doesnt consider food or fuel costs when determining what the inflation rate is, but with the price of oil looking like it is on its way back up i suspect that inflation will effect the government tracked items soon enough. like every other investment its more of a crap shoot than anything else.

thanks for the help

Dutch
02-25-2011, 12:16 PM
There are a number of federal gov't agencies which issue their own bonds... you'd have to google to see who they are.

just did - fannie mae and ginny mae popped up - I think I will pass. :D

paladin
02-25-2011, 01:02 PM
and by the same token, most 401(K) plans in the early/mid 80's were paying 7-8%, and it started creaping up where at a point it touched 21%. Our plan holder called a meeting and said they could not stay in business at those rates and begged to have each holder agree to a permanent rate of 14% on the plan. Most folks said no because they were "getting rich" at the rates. I took the 14%. Three weeks later the bottom dropped out of the market and everyone was back to around 6%...except me (and a very few other folks) and we were locked in to 14%.
Again I was lucky, I knew nothing about stocks. When in SEA, to conceal who we were working for, the paychecks would change every 6-9-12 months. Through "arrangements" made by our parent organization, we would be working for Ford Aerospace, and go on their payroll, and the gov. would reimburse them. Once on their payroll we could purchase company stock at years end for the lowest price it had been offerred during the year. In April it could be $5 a share, by Dec it could be $25 and we could buy an amount equal to 3 months salary at the $5 rate. During that time I "worked" for half a dozen major companies, on paper. I also bought their stock and joined their credit unions. Once a member, always a member. When I bought the first house, I borrowed the money from the credit union at 5.34%. You are not allowed to borrow money and then invest it in company stocks. I borrowed money from one credit union, and invested in another. The interest on my 401(K) always exceeded the interest rate on my house.