TIPS offer tradable income, while I-Bonds provide tax-deferred growth and principal stability. Pla2na/Shutterstock
A Treasury inflation-protected security (TIPS) and a Series I Savings Bond (I-bond) are two government-backed investments designed to protect your purchasing power when inflation rises. They both adjust with inflation, but work differently.
A TIPS is a marketable Treasury bond whose principal value rises with inflation, and it pays interest twice per year. An I-bond combines a fixed interest rate with an inflation rate, compounding tax-deferred until redemption.
