TIPS (Treasury Inflation-Protected Securities)
Financial glossary definition
Definition
US government bonds whose principal value adjusts based on changes in the Consumer Price Index. TIPS provide a guaranteed real return above inflation, making them an effective inflation hedge.
Related Terms
Consumer Price Index (CPI)
A measure of the average change in prices paid by consumers for a basket of goods and services. The …
Deflation
A decrease in the general price level of goods and services — the opposite of inflation. While lower…
I-Bond
A US savings bond whose interest rate adjusts every 6 months based on inflation (CPI). I-Bonds provi…
Inflation
The rate at which the general level of prices for goods and services rises over time, eroding purcha…
Nominal Return
The raw percentage return on an investment before adjusting for inflation. A 10% nominal return with…
Purchasing Power
The quantity of goods and services that a unit of currency can buy. As inflation rises, purchasing p…