Treasury Inflation-Protected Securities, or TIPS, are bonds offered by the U.S. government that protect against inflation. The principal value of a TIPS bond increases with inflation, as measured by the Consumer Price Index, and the interest payments on the bond adjust accordingly. The investor receives the adjusted principal when the bond matures, typically higher than the original investment.
TIPS can be an attractive investment for those concerned about the potential for inflation to erode the purchasing power of their savings.
Unlike other types of bonds, the interest payments on TIPS are not fixed so they may fluctuate along with changes in the inflation rate.
However, TIPS offer a higher level of protection against inflation than traditional bonds.
You may visit the U.S. Treasury website for more information on TIPS, including current rates and how to purchase them.