Treasury Inflation Indexed Securities also known as TIPS, are a unique asset class, dollar denominated, inflation protected, and backed by the faith and credit of the United States. TIPS provide suitable research for investors interested in low cost, low risk investments.TIPS are marketable securities whose principal is adjusted by changes in the Consumer Price Index. With inflation or a rise in the index, the principal increases. With a deflation or a drop in the index, the principal decreases.The relationship between TIPS and the Consumer Price Index affects both the sum you are paid when your TIPS matures and the amount of interest that a TIPS pays you every six months. TIPS pay interest at a fixed rate. Because the rate is applied to the adjusted principal, however, interest payments can vary in amount from one period to the next. If inflation occurs, the interest payment increases. In the event of deflation, the interest payment decreases.At the maturity of a TIP, you receive the adjusted principal or the original principal; whichever is greater. This provision protects you against deflation.Tips will add diversification to your portfolio; it is an asset suitable for investors focused on the future purchasing power of their savings. With TIPS the volatility is low and has a potential for attractive returns. The correlation with inflation has a long run compared to assets such as real estate, commodities, or other real assets.TIPS have a deflation floor so you won’t get back less than the nominal principal value at maturity.The TIPS market includes the worlds largest indexed securities market, over $450 billion of TIPS outstanding, and a daily turnover approaching nearly $10 billion.As part of the Treasury’s Funding Strategy TIPS includes nearly 10% of the marketable debt portfolio, quarterly 10-year TIPS notes, and semi-annual 5- and 20-year TIPS issuance. Investors can purchase TIPS in denominations as low as $100.You can purchase TIPS directly from a bank or broker, and from the Treasury department at treasurydirect.gov. Read more from their link below.
Do you know what the top tips are for picking stocks are? No one can tell the future, but we have compiled three of our top tips to getting your investment portfolio to make some real returns in the future. Just because a stock is hot, it doesn’t mean that it’s a really good long term pick for your portfolio. The front page of the New York Times can tell you what is hot, lets take a look at some different tips for the investing world in general are.1. Do your research. Just because something is trading at 5 times earnings, doesn’t mean it’s an incredible deal. In fact, just the opposite might be true. If its really supposed to be trading at something like 10 times earnings, why do you think it’s so low? The old adage: “if it’s too good to be true, it probably is” holds firm in this situation. Big Wall Street investment houses spend years trying to run various numbers and calculations on different scenarios to determine what the exact valuation of a stock might be. If a stock’s valuation is too low, there is a good chance, that the stock might have some problems associated with it, like impending competition, government inquiries, or even litigation problems.2. Go with what you know. If you are a computer software engineer, you might be best suited to analyze software businesses or maybe even internet stocks that use a lot of software in their business. This will help you get a better understanding of what you are buying and how the business deals with its costs.3. Get financially literate. Do you know what a balance sheet is? An income statement? A statement of cash flows. These 3 are the groundings of what it takes to really understand a business’ current and future performance. Learn them and get to know how and what they are and how they are used to base an investment.These are really just the tip of the iceberg when it comes to learning about investments and their potential. Visit our site today to get more tips, resources, and a blog about different investment tips.