Inflation-protected security

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Inflation-Protected Security

A bond that protects the bondholder from inflation. Most bonds pay a fixed coupon rate periodically and mature at par. While this carries low risk, it exposes investors to the possibility that the inflation rate will outpace the interest rate represented on the coupon. In order to protect against this, an inflation-protected security automatically increases its principal according to the inflation rate. Thus, while the coupon rate does not increase, the dollar amount paid does. Because an IPS is so safe, it offers a very low rate of return. See also: Real Return Bond, TIPS.

Inflation-protected security (TIPS).

US Treasury inflation-protected securities (TIPS) adjust the principal twice a year to reflect inflation or deflation measured by the Consumer Price Index (CPI).

The interest rate is fixed and is paid twice a year on the adjusted principal. So if your principal is larger because of inflation you earn more interest. If it's lower because of deflation, you earn less.

You can buy TIPS with terms of 5, 10, or 20 years at issue using a Treasury Direct account or in the secondary market. At maturity you receive either the adjusted principal or par value, whichever is greater.

You owe federal income tax on the interest you earn and on inflation adjustments in each year they're added even though you don't receive the increases until the security matures. However, TIPS earnings are exempt from state and local income taxes.

These securities provide a safeguard against deflation as well as against inflation since they guarantee that you'll get back no less than par, or face value, at maturity.

References in periodicals archive ?
She also reminded the LGUs that it is the right of IPs to have a permanent representative in the LGUs so that they can express their issues and concerns.
In light of recent discussions concerning the extent to which a plan's fiduciaries can provide guidance to an investment manager within the context of an ERISA Section 3(38) arrangement, it is interesting to consider the extent to which a plan's fiduciaries can exercise control over an investment manager through an IPS (assuming, of course, that the primary draftsperson of the IPS was other than the plan's investment manager).
Moreover, through the IPS, the company is targeting GCC investors to invest in the Egyptian real estate market, as part of the real estate export initiative.
They also said that CPP-NPA-NDF are organizing the IPs at the regional level "through deceit and lies" to support several parties in Mindanao.
In my book Intellectual and Cultural Property Rights of Indigenous and Tribal Peoples of Asia, I argued that multinationals from the industrial world exploit IPs' biological wealth and then sell the patented products back to them at excessive prices.
iPS Academia Japan is the entity established to commercialize the intellectual property of Kyoto University and other prominent universities and research institutions.
IPS Advisors is an independent life and health benefits brokerage and consulting firm that consults clients on corporate employee benefits, 401k retirement plans, executive benefits and actuarial services.
To isolate an enriched population of osteoblasts for iPS reprogramming, we crossed Osx1-GFP::Cre with Oct4-EGFP transgenic mouse lines [22, 23] and analyzed 4 out of 8 neonatal mice that showed the presence of both Oct4-EGFP and Cre transgenes in their genome after genotyping analysis (Figure 1(a)).
Dawood Al Shezawi, CEO of IPS Organizing Committee, commented: "We are proud to be partnering with MAG PD as it is one of the most pioneering and diverse developers in the region.
On the partnership, Talal Moafaq Al Gaddah, the chief executive of MAG PD, said: "We are pleased to tie-up with IPS as it is an entirely unique platform in the real estate market.
BANKING AND CREDIT NEWS-November 9, 2017-Nautic Partners sells IPS to Sherman Capital
lthough not a required document, an investment policy statement (IPS) is now in place with 65% of plan sponsors, according to the 2016 PLANSPONSOR Defined Contribution (DC) Survey.