TIPS (Treasury Inflation Protected Securities)

TIPS (Treasury Inflation Protected Securities)

TIPS are U.S. government debt indexed to inflation. The principal of a TIPS either increases with inflation or decreases with deflation, as measured by the Consumer Price Index. At maturity 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. (Source: ETF Guide)