TIPS, or Treasury Inflation-Protected Securities, are one type of inflation-protected bonds sold by the U.S. government. They are similar to other treasuries and are a part of a large liquid market. You can invest as much capital as you want into them, and they trade every day on the secondary market. If you don't want to buy them individually from the government, you can even buy them packaged up in ETFs and mutual funds. This makes them very convenient for building a portfolio.
However, it's important to note that while TIPS can be a great investment, they do come with the risk of losing money as they can go up and down with interest rates and the markets.
On the other hand, Series I Savings Bonds, another type of inflation-protected bond, are built on the Savings Bond Program and have a lot of limitations. You can only buy up to $10,000 worth of them online a year, and you have to hold them for one year before selling. If you sell them before five years, there's an interest rate penalty. Despite these limitations, Series I Savings Bonds are a good deal because you cannot lose capital investing in them. The government guarantees your principal back.
Whether you choose TIPS or Series I Savings Bonds depends on your situation and whether you're trying to build a portfolio or to stash away some money for the long term that is saved from inflation.
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So, while you're considering your investment options, why not also consider a way to give back? With Daffy, you can manage your charitable giving just as easily as your investments.
Please note that the information contained on this page is for educational purposes only and should not be considered tax advice. Any calculations are intended to be illustrative and do not reflect all of the potential complexities of individual tax returns. To assess your specific tax situation, please consult with a tax professional.