How Inflation-Protected Securities Work: TIPS in 2025

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How Inflation-Protected Securities Work: TIPS in 2025

How Inflation-Protected Securities Work: TIPS in 2025

Updated for 2025 • TIPS safeguard investors against inflation. Here’s how they perform today.

1) What Are TIPS?

Treasury Inflation-Protected Securities (TIPS) are U.S. government bonds indexed to inflation. Their principal value rises with the Consumer Price Index (CPI).

2) Benefits

  • Protects purchasing power during high inflation.
  • Backed by U.S. government.
  • Pays interest semiannually based on adjusted principal.

3) Risks

  • Lower yields than regular Treasuries in stable inflation.
  • Market value can drop when interest rates rise.
  • Tax on inflation adjustments even before maturity.

4) Current Rates (2025)

MaturityReal Yield
5-Year TIPS1.7%
10-Year TIPS2.0%
30-Year TIPS2.3%

5) Conclusion

TIPS are a smart hedge for investors in 2025, but they work best as part of a diversified portfolio rather than a stand-alone solution.

Labels: Finance,Investing