TIP ETFs Can Be a Savior In Inflationary Periods
April 18th at 1:00am by Tom Lydon
Treasury Inflation Protected Securities, or TIPS, have made their way into exchange traded funds (ETFs).
These U.S.-government issued bonds are issued by the Treasury and they are sellable in the "after" market. Designed in terms of 5, 10 and 20 years, their interest rate is determined at auction, and they are sold in increments of $1,000.
The principal is adjusted along with the Consumer Price Index (CPI). If the CPI falls, so does the principal, and vice versa, reports Steven Halpern for Blogging Stocks.
TIPS are a decent investment, with the lowest risk that you can find anywhere. iShares Lehman TIPS (TIP) and SPDR Barclays Capital TIPS (IPE) are two ways an investor can minimize inflation risk.
For full disclosure, some of Tom Lydon’s clients own shares of TIP.
