TIPS are "Inflation-Protected Securities" offered by the United States Treasury.
TIPS are Inflation Protected Securities offered by the United States Treasury.
They are a kind of bond, and pay interest, but their value is adjusted for inflation by the officially published Consumer Price Index (CPI). Like all bonds, they are subject to interest-rate risk if they are sold before their maturity date.
Besides being available for purchase from the US Treasury, there are several bond ETFs and mutual funds which invest in TIPS. (These bond funds will always be subject to interest-rate risk because they continually reinvest their holdings.)
TIPS may be appropriate securities for people who need to live off their savings (e.g. people in retirement) and who need to protect themselves against any unexpected increase in the cost of living, and cannot afford to expose themselves to losses.
