A Smart Way to Buy Inflation Insurance

Treasury Inflation Protected Securities
December 8, 2022

Painfully high inflation over the last few years has eaten away at the value of money. How can CFOs protect their hard earned or raised cash? Thanks to the U.S. Government, there's an easy way!

What are TIPS?

Treasury Inflation Protected Securities, or TIPS, are bonds issued and backed by the United States Treasury. As the name suggests these types of bonds provide protection against inflation. They are also  backed by the US government making them especially safe. Adding TIPS to a sensible cash management allocation can provide a steady stream of income that will keep pace with the cost of running your business.

How do TIPS work?

TIPS maturities range from a few months all the way to 30 years. They are similar to Treasury Bills except the principal moves up or down with inflation. Practically, this means that TIPS yield increases with inflation which means they are an effective inflation hedge.

Let's look at a concrete example. Assume we buy a 1 year TIPS for $99 which means it has a 1% yield:

  • If inflation is 10% during that year the value of that TIPS increase to $110 at maturity
  • So the total return is $110-$99 = $11 or 11% (1% yield + 10% inflation)

Unlike regular Treasury Bills, that pay a fixed coupon, for TIPS the higher the inflation the higher the yield!

A great tool for CFOs

CFOs look to optimize the finances of their businesses and act as good stewards of the assets on their company balance sheet. TIPS are a great instrument to protect idle cash against inflation while benefiting from a higher yield. Open an account with Treasure today to allocate some of your funds to TIPS.

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Treasure Technologies Inc.
1324 Clement St
San Francisco, CA 94118
* Returns are projected based on current performance and are gross of fees. Treasure's fee is 35 basis points on Assets Under Management. There is no fee for Treasure Cash. Returns are subject to change daily.

** Treasure Cash accounts are held at Grasshopper Bank, N.A., our FDIC partner bank. Return differentials based on national average checking account rates as of 5/24/2023. Source: FDIC

Website is operated by Treasure Investment Management, LLC ("Treasure"), a wholly-owned subsidiary of Treasure Technologies, Inc., and an investment adviser registered with the U.S. Securities and Exchange Commission ("SEC"). Brokerage services are provided to clients of Treasure by Apex Clearing Corporation ("Apex"), an SEC-registered broker-dealer and member FINRA.

Investing involves risk, including loss of principal. The contents of this website are provided for information purposes only and do not constitute an offer to sell or a solicitation to buy securities. Past performance is no guarantee of future returns.