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inflation protected securities (TIPS) are United States
government securities introduced to the financial markets in
1997 that are designed to provide protection against inflation.
They are categorized as fixed income investments because they
are a type of bond. Treasury inflation protected securities are
largely considered to be extremely safe investments because
there is not a lot of risk of losing capital or money involved,
but investors should not expect blockbuster profits, either.
These investments are designed to protect wealth as opposed to
growing the initial investment at an aggressive rate, and they
are largely used to provide diversification to an investment
portfolio. Like bonds, Treasury inflation protected securities
have a face value and grow at an interest rate. The interest on
TIPS is typically paid twice a year at a predetermined fixed
interest rate. Even though a fixed rate is applied to TIPS, the
interest rate can vary each pay