10 Shocking Secrets to Master Inflation-Protected Bonds (TIPS) Now

Treasury Inflation-Protected Securities (TIPS) remain a cornerstone for investors seeking to preserve real purchasing power amid inflationary pressures. Navigating their complexities—from tax implications to market volatility—requires precision and strategic foresight.

Holding TIPS within tax-advantaged accounts like IRAs or 401(k)s mitigates the phantom income tax burden, while understanding the Breakeven Inflation Rate (BEI) provides critical insight into relative value versus nominal Treasuries. Short-duration TIPS ETFs offer liquidity and reduced volatility for those prioritizing stability.

The maturity guarantee rule underscores the importance of holding individual TIPS bonds to term, ensuring deflation protection and insulation from secondary market swings. For taxable accounts, I-Bonds present a complementary tool, with TIPS reserved for larger, income-focused portfolios.