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A treasury security that is indexed to inflation in order to protect investors
from the negative effects of inflation. TIPS are considered an extremely low-risk
investment since they are backed by the U.S. government and since their par value
rises with inflation, as measured by the Consumer Price Index, while their interest
rate remains fixed. Interest on TIPS is paid semiannually. TIPS can be purchased
directly from the government through the Treasury Direct system in $100 increments
with a minimum investment of $100 and are available with 5-, 10-, and 20-year
maturities.
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