Treasury-issued TIPS provide protection from inflation
Treasury Inflation Protected Securities, also know as TIPS, offer a unique investment avenue for investors. Issued by the U.S. Department of the Treasury, TIPS are securities that go with the inflation rate flow, as dictated by the Consumer Price Index. When the inflation rate increases, the interest rate on TIPS follows suit. But when deflation occurs, the rate goes down.
And, TIPS don’t come cheap, requiring a $1,000 minimum investment. If you’re curious about TIPS, a number of Web sites offer useful information. Here are just a few:
Annuity.com - www.annuity.com/treasury-inflation-protected-securities.cfm - Provides good description of Treasury Inflation Protected Securities, and benefits and risks.
Bankrate.com - www.bankrate.com/brm/green/investing/investing3-4a.asp - Offers useful overview of how TIPS work and investment requirements.
U.S. Department of the Treasury - www.treasurydirect.gov/instit/annceresult/tipscpi/tipscpi.htm - Features wide variety of TIPS information, including latest reference figures for the CPI.