A few days ago, I wrote a BankShout post about TreasuryDirect, the U.S. Government’s website for electronic purchase and redemption of U.S. Treasury Department securities. Including bills, notes, and bonds, these securities offer a measure of security (yes, the U.S. government is still considered a safe investment, when compared with riskier plays such as the stock market or commodities) that can be considered similar to bank deposits. In addition, banks also offer some of the Treasury securities, including Treasury Inflation-Protected Securities, or TIPS.

TIPS can be a key component of an investment portfolio. I was reading this week several news articles that talked about inflation; the Federal Reserve, which is charged among other things with keeping inflation in check, constantly worries about the threat of consumer prices rising. TIPS function as a sort of hedge against inflation. Since TIPS’ value rise with increases in the Consumer Price Index, those who worry that the U.S. government may “inflate its debt away” by allowing inflation to rise have an attractive investment in TIPS.

Here are some other key points about TIPS, courtesy of the TreasuryDirect website:

• Bids for TIPS can be competitive or non-competitive
• TIPS are sold in 5, 10, and 30 year terms
• TIPS are issued in $100 increments
• Electronic format means no paper to keep track of

As I mentioned in my earlier post, TIPS increase with inflation, but you can’t lose the initial principal: when the security matures, you get either the initial investment or the investment plus interest earned, whichever is higher. The safety of these and other U.S. Treasury Securities might make them a natural fit for BankShout readers, many of whom seek safety in FDIC-insured bank deposits. You can learn more about TIPS at TreasuryDirect’s dedicated webpage here.