Occam’s – Can TIPS Help You?
Inflation is one of the most serious risks that retirees face. While there are a lot of ways to mitigate inflation risk, TIPS, or Treasury Inflation Protected Securities, are one of the few investment options that directly hedge against inflation risk. They aren’t perfect, and there are certainly some things to consider when you use them in a portfolio, but they are an incredibly useful tool at your disposal. Before we start thinking about if they are appropriate for you and your situation, let’s talk about what exactly TIPS are, how they work, and why one would want to use them. What are TIPS? As you might surmise from the name, TIPS are securities issued by the US Treasury that try and protect you from inflation. More specifically, these are bonds that are indexed to the US City Average All Items Consumer Price Index for all Urban Consumers (in other words, the general broad based inflation rate, and what most people mean when they say CPI or inflation). TIPS pay a fixed interest rate, and account for inflation by adjusting the actual principal amount of the bond. When there is inflation, the principal of the bond will adjust up, and […]

Source: Retirement Researcher

Occam’s – Can TIPS Help You?

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