TIPS funds
  • TIPS funds can help you hedge against inflation when it comes to investing
  • TIPS mutual funds offer better liquidity and flexibility than investing in the securities themselves
  • TIPS investments can make good financial sense in these uncertain economic times

TIPS funds may be one of the best places to invest your capital right now, to hedge against inflation and high market volatility both. Once you understand what TIPS, better known as Treasury Inflation Protected Securities, have to offer you will see why they make sense at this point in time. Due to the current economic crisis and the volatility of Wall Street and many markets, investing in stocks may not make you comfortable. But you do not want your investment capital sitting around not making any money or working for you. With all of the uncertainty due to the global financial crisis, government securities and investments which hedge against inflation changes are both good choices. TIPS investments can do both of these at the same time. TIPS mutual funds can offer all of the benefits of buying these securities while allowing you to have more liquidity and flexibility.

How do TIPS and TIPS mutual funds work? A Treasury Inflation Protection bond is offered by the US government with a face value that is one thousand dollars for each bond. Each bond also carries a stated real interest rate as well. Every six months, interest is paid on these bonds using the real interest rate stated, and then the value of the bond is changed to reflect any CPI rate change. Lower inflation rates can lower the bond value, but it will never go lower than the thousand dollar face value of the bond. TIPS mutual funds offer benefits of investing in these securities combined with the benefits of using mutual funds which have no load fees. Mutual funds are pools of funds from many different investors which are combined, for better performance and purchasing leverage benefits. TIPS investments using mutual funds offers more liquidity, because these fund shares are actively traded and can be sold at any time.

TIPS funds are relatively safe, with no high levels of volatility. These securities can also help you diversify your portfolio while protecting you against inflation concerning your investments. By investing in mutual funds that invest in TIPS, you have more flexibility when it comes to holding or selling. When you choose no load TIPS funds, you will see even more investment benefits. Load fees are basically the same as a broker commission or sales incentive, and these are unnecessary fees which will be deducted from your investment capital. Thorough research will help you determine which TIPS funds are true no load funds and which are really load funds with hidden commissions and sales fees.

TIPS InvestmentsTIPS investments make good financial sense, especially in the current uncertain global economy. Inflation can go up substantially, or it could fall extremely low, and TIPS mutual funds can protect your investment capital either way. Because these securities are backed by the full United States Government, the risk of default is the lowest possible. This means that TIP funds are one of the safest investment options you will find in the current economic climate. Many markets have high levels of volatility right now, and global uncertainty is making this problem worse. With TIPS mutual funds, there are none of these drawbacks and a wide range of investing benefits.

If you are looking for ways to put your investment capital to work for you without taking huge risks or seeing catastrophic losses to your portfolio, invest in TIPS funds for the current period, until the global economy and world markets stabilize some. These funds may have a return that is a little lower than high risk investments, but capital preservation strategies will ensure that your investment capital stays safe and secure.