CIBC Private Wealth Management Blog
Dan Skolochenko
Investments

Treasury Inflation-Protected Securities (TIPS)

Dan Skolochenko
March 05, 2019

What are they? Treasury Inflation-Protected Securities (TIPS) are U.S. Treasury bonds that provide protection against inflation. The par value, or principal, of TIPS rises with inflation and falls with deflation, as measured by the Consumer Price Index (CPI). Interest is paid twice a year at a fixed rate. Since the rate is based on the adjusted principal, interest payments also rise and...
Investments

Corporate Floating Rate Notes

Dan Skolochenko
February 05, 2019

What are they? Corporate floating rate notes (“FRNs”) are investment-grade bonds issued by corporations that have a variable interest rate, which is tied to a benchmark such as the U.S. Treasury bill rate, LIBOR, the Fed funds rate, or the prime rate. Because their coupons adjust with changes in short-term interest rates, FRNs are often used to help reduce interest rate risk during periods...
Investments

What Makes Variable Rate Demand Notes Stand Out?

Dan Skolochenko
August 28, 2018

Variable rate demand notes (VRDNs) are floating-rate debt securities issued by municipalities and are most often held in municipal money-market funds. Like other municipal debt, most VRDNs are not taxed at the federal level, and residents of issuing states are generally exempt from relevant state taxes. In general, VRDNs have three key characteristics that distinguish them from other municipal...
Investments

Understanding Premium Bonds

Dan Skolochenko
August 14, 2018

As a long-term investor, you may choose to include fixed income in your investment portfolio for a variety of reasons, such as capital preservation, income generation, or a combination of both. Depending on your financial circumstances, tax bracket, and whether you are purchasing bonds in a taxable or qualified account, you have the option of taxable bonds (Treasury bonds, agency bonds, and...
Investments

The Advantages of Investing in Premium Bonds

Dan Skolochenko
September 28, 2017

Download PDF   Investors are often put off by the idea of buying a premium bond, mistakenly believing that they’ll lose money on the investment.  After all, they’ll be paying more than par for the bond but receiving only par when the bond matures. Why do bonds trade at a premium? Typically, it’s because the coupon rate is greater than the current market rate for a bond with...