TIPS offer the appeal of keeping pace with the rate of inflation based on the CPI (Consumer Price Index), through a semi-annual adjustment of the prices of the bond, so the investor can feel assured that not only will coupon payments be earned over time, but the principal upon maturity will be returned as expected as well via these adjustments. [Why TIPS ETFs Have Negative Yields]

However, TIPS investors must also be cognizant of the fact that along the way, the ride is not always smooth and subject to price volatility, so those not willing to tie up their cash for extended periods of time may be subject to selling at whatever the current price the TIPS bonds are trading at, which of course could be higher or lower than the original purchase price.

iShares Barclays TIPS Bond

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