DEFINITION of 'Inflation-Protected Security - IPS'

A type of fixed-income investment that guarantees a real rate of return. The real rate of return is the nominal return, less the inflation rate, thus protecting investors from inflation.

BREAKING DOWN 'Inflation-Protected Security - IPS'

The purchase of IPS products is most often done with government products, such as Treasury inflation-protected securities (TIPS), but private sector companies also offer these products.

RELATED TERMS
  1. Inflation-Protected Annuity - IPA

    An annuity investment that guarantees a real rate of return at ...
  2. After-Tax Real Rate Of Return

    The actual financial benefit of an investment after accounting ...
  3. Real Rate Of Return

    The annual percentage return realized on an investment, which ...
  4. Nominal Interest Rate

    The interest rate before taking inflation into account. The equation ...
  5. Nominal Rate Of Return

    The amount of money generated by an investment before expenses ...
  6. Real Interest Rate

    An interest rate that has been adjusted to remove the effects ...
Related Articles
  1. Insights

    What's a Real Rate of Return?

    A real rate of return is an annual percentage investment return that’s adjusted for inflation, taxes or other factors.
  2. Investing

    Interest Rates Explained: Nominal, Real, Effective

    Interest rates are divided into subcategories. Smart investors look beyond the nominal or coupon rate of a bond or loan to see if it fits their objectives.
  3. Investing

    Inflation Protected Securities: How They Work

    Learn how the U.S. Treasury inflation-protected securities (TIPS) work, which considerations investors should keep in mind and for whom TIPS are most suitable.
  4. Investing

    Retirement Planning: Why Real Rates of Return Matter Most

    Here's how to plot your real rate of return, understand your "personal inflation rate" and safeguard your retirement funds against inflation.
  5. Investing

    Treasury Inflation-Protected Securities (TIPS)

    Treasury inflation-protected securities are treasury securities that make adjustments for inflation as reflected in the Consumer Price Index.
  6. Investing

    Projected Returns: Honing The Craft

    Find out how to forecast long-term returns on the three major asset classes.
  7. Retirement

    3 ETFs to Protect Your Retirement From Inflation (WIP, TIP)

    Learn more about three of the best inflation-protected exchange traded funds for investors who are retired or who are approaching retirement.
  8. Investing

    Using the TIPS Spread to Predict Inflation (TIP, ATPIX)

    Learn how analysts and investors use the TIPS spread to forecast inflation rates, and how accurate the TIPS spread has been as an inflation predictor.
  9. Investing

    Introduction To Inflation-Protected Securities

    Inflation is an enemy to investors - except to those who invest in IPS, which guarantee a real rate of return with no credit risk.
RELATED FAQS
  1. Should I include inflation-protected securities in my 401(k)?

    Learn how to protect your 401(k) from the adverse effects of inflation by adding inflation-protected securities to your portfolio. Read Answer >>
  2. What is the Difference Between Real and Nominal Interest Rates?

    Learn what nominal interest rates and real interest rates are, how real interest rate takes into account the inflation rate, ... Read Answer >>
  3. When is the best time to invest in inflation-protected securities?

    Learn how to determine when to consider buying an inflation-protected security to enhance the returns of your investment ... Read Answer >>
  4. What is inflation and how should it affect my investing?

    Inflation, an economic concept, is an economy-wide sustained trend of increasing prices from one year to the next. The rate ... Read Answer >>
  5. How does inflation affect fixed-income investments?

    Learn about the ways inflation can harm fixed-income investments. Find out how to monitor the impact of inflation using common ... Read Answer >>
Hot Definitions
  1. Debt Security

    Any debt instrument that can be bought or sold between two parties and has basic terms defined, such as notional amount (amount ...
  2. Taxable Income

    Taxable income is described as gross income or adjusted gross income minus any deductions, exemptions or other adjustments ...
  3. Chartered Financial Analyst - CFA

    A professional designation given by the CFA Institute (formerly AIMR) that measures the competence and integrity of financial ...
  4. Initial Coin Offering (ICO)

    An Initial Coin Offering (ICO) is an unregulated means by which funds are raised for a new cryptocurrency venture.
  5. The Bernie Madoff Story

    Bernie Madoff ran a multibillion-dollar Ponzi scheme that is considered the largest financial fraud of all time.
  6. Pyramid Scheme

    An illegal investment scam based on a hierarchical setup. New recruits make up the base of the pyramid and provide the funding, ...
Trading Center