economy
With inflation up, my friends are asking about TIPS and I bonds—here's what I told them
Any time inflation makes headlines, savers begin to wonder about tools that help them preserve the value of their money.
TL;DR
- TIPS (Treasury Inflation-Protected Securities) increase in principal value with inflation, paying interest twice a year.
- I bonds pay a fixed rate plus an inflation-adjusted rate that changes every six months.
- Both TIPS and I bonds are considered low-risk due to U.S. government backing.
- Financial experts suggest incorporating inflation protection into planning rather than reacting to news.
- The best use of TIPS and I bonds depends on individual goals, such as emergency funds or short-term savings.
- For long-term goals, equities are historically better at maintaining and growing purchasing power than inflation-protected securities.