Some Tips on TIPS

Economic Blog

12/22/2020

With concern about inflation rising for some investors, we’ve started to receive questions about Treasury Inflation-Protected Securities, or TIPS. With TIPS, the principal of the bond, the part that’s paid back when the bond matures, is adjusted for inflation (or deflation) as measured by the Consumer Price Index (CPI), which is a form of inflation protection. However, the added inflation protection doesn’t come for free. TIPS almost always offer a lower yield than ordinary “nominal” Treasuries with the same maturity, usually significantly lower. Continue reading