Investment rate vs high rate
Whatever rate inflation grows during the time you hold the TIPS, your investment’s value will rise with that inflation rate. For example, you might invest in TIPS today that only comes with a 0.35% interest rate. That’s less than a certificate of deposit’s rates and even basic online savings accounts. For example, today’s live 30-year fixed rate as of March 17, 2020 is 4.125% (4.125% APR), so the investment property rate would be around 4.625% to 4.875% (4.625 – 4.875% APR). The average CEF has a distribution rate of more than 6% of net asset value (NAV). However, we caution income-seeking investors not to get myopic when it comes to their CEF investments. For long-term investors, a CEF's total return is far more important than its distribution rate. This is true not only for CEFs but for all investments.