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Treasury Inflation-Protected Securities (TIPS)

Found out about TIPS (Treasury Inflation-Protected Securities) while waiting one of the CNN channels the other day.

The main purpose is to protect your investment against inflation.

You can get one for only $100 up to $5 million.

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 and Legacy Treasury Direct through non-competitive bidding.

For more information on TIPS, go to http://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm

Posted Wednesday Feb 10