Are there any financial instruments that offer a set real interest rate rather than a set interest rate? For example, an asset structured like this:

The asset is purchased at an initial price $P$ and matures after time $T$ (in years) to a value of $M$.

$M$ is defined as $P\times(1+inf)^T\times(1+r)^T$ where $inf$ is the average inflation rate between the time of purchase and maturity and $r$ is an agreed upon rate.

I am interested in this type of investment because it appears to guarantee the investor a very predictable increase in value that is independent of inflation.

  • 1
    do you feel that the prime rate tracks the inflation rate well, or at all? Would something that offered "prime + 2" meet your definition? Jul 14, 2016 at 15:46
  • 1
    Which country's definition of inflation? Jul 14, 2016 at 15:54

1 Answer 1


Treasury Inflation Protected Securities, or TIPS, offer returns that are indexed to inflation, as measured by the Consumer Price Index.

  • There are also many mutual funds that invest in these so that you don't have to figure out which particular issue(s) to buy.
    – dg99
    Jul 15, 2016 at 17:16

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