What Are Treasury Inflation Bonds?
Treasury inflation bonds are securities that are designed to protect an investor from the long-term effects of inflation. The principal amount of a treasury inflation bond increases or decreases in direct proportion to the rate of inflation, but never falls below the original purchase price. These bonds are officially known as Treasury Inflation-Protected Securities and are issued by the U.S. Department of the Treasury to both individual and corporate investors. Treasury inflation bonds are issued in 5, 10, or 30 year terms and pay a fixed rate of interest twice each year. These inflation-protected bonds can be purchased through stockbrokers, banking institutions, or directly from the U.S. Treasury.
