Treasury Inflation-Protected Securities (TIPS)

[syrakusos]

Treasury Inflation-Protected Securities, or TIPS, provide protection against inflation. The principal of a TIPS increases with inflation and decreases with deflation, as measured by the Consumer Price Index. When a TIPS matures, you are paid the adjusted principal or original principal, whichever is greater.

TIPS pay interest twice a year, at a fixed rate. The rate is applied to the adjusted principal; so, like the principal, interest payments rise with inflation and fall with deflation.

You can buy TIPS from us in TreasuryDirect. You also can buy TIPS through a bank or broker. (We no longer sell TIPS in Legacy Treasury Direct, which we are phasing out.)

You can hold a TIPS until it matures or sell it before it matures.

Treasury Direct dot gov here: http://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm

[Brant Gaede]

TIPS (or treats?). Sounds like welfare, or we're from the government and here to help you.

--Brant

let's see: the government adjusts the CPI so it adjusts the payout by reference to its own ever-changing standard