Tip on TIPS

Inflation remains low, but it can edge up quickly. Rising consumer prices can hurt your bond portfolio by eroding the value of the interest payments. One way to reduce those negative effects is to keep some of your bond holdings in Treasury Inflation-Protected Securities, or TIPS.

The interest payments and principal value of Treasury Inflation-Protected Securities are linked to inflation, rising when the U.S. Consumer Price Index goes up and falling when it goes down. TIPS have underperformed the broader bond market in recent years due to very low U.S. inflation. (In 2014, the U.S. consumer price index rose just 0.8%.1) However, the best time to buy TIPS is when inflation is low, as their price rises with inflation.

Chart of Tips on TIPS

1U.S. Bureau of Labor Statistics.


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This information is general in nature and is not intended to be legal, tax, or financial advice. Although Regions believes this information to be accurate, it cannot ensure that it will remain up to date. Statements or opinions of individuals referenced herein are their own—not Regions'. Consult an appropriate professional concerning your specific situation and irs.gov for current tax rules. Regions, the Regions logo, and the LifeGreen bike are registered trademarks of Regions Bank. The LifeGreen color is a trademark of Regions Bank.