Treasury Inflation-Protected Securities (TIPS)
Treasury Inflation-Protected Securities, or TIPS, provide protection against inflation. The principal of a TIPS increases with inflation and decreases with deflation, as measured by the Consumer Price Index. When a TIPS matures, you are paid the adjusted principal or original principal, whichever is greater.
TIPS pay interest twice a year, at a fixed rate. The rate is applied to the adjusted principal; so, like the principal, interest payments rise with inflation and fall with deflation.
You can buy TIPS from us in TreasuryDirect. You also can buy TIPS through a bank or broker. (We no longer sell TIPS in Legacy Treasury Direct, which we are phasing out.)
You can hold a TIPS until it matures or sell it before it matures.
Use TIPS to:
- Diversify your investment portfolio
- Supplement retirement income
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| Original Issue Rate: | The yield determined at auction. See rates in recent auctions |
| Minimum purchase: | $100 |
| Maximum Purchase (in a single auction): |
Non-competitive: $5 million Competitive: 35% of offering amount (See types of bidding in "Auctions in Depth") |
| Investment Increment: | Multiples of $100 |
| Issue Method: | Electronic |
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Rates & Terms
- TIPS are issued in terms of 5, 10, and 30 years.
- TIPS Inflation Index Ratios can be used to calculate the inflation adjustment to principal on previously issued TIPS.
- TIPS can be held until maturity or sold before maturity.
Redemption Information
- Minimum Term of Ownership: In TreasuryDirect, 45 days.
- Interest Earning Period: To maturity
Tax Considerations
- Interest income and growth in principal are exempt from state and local income taxes.
- Interest income and growth in principal are subject to federal income tax.
TIPS-Related FAQs
- What happens to TIPS if deflation occurs?
- What are the maturity terms for TIPS?
- How do I know when TIPS will be auctioned?
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