Are TIPS Really Safe and Worry-Free?
The Fed’s aggressive monetary easing has many investors considering Treasury inflation-protected securities (TIPS) as a cornerstone of their retirement strategy. While TIPS’ unique ability to protect against CPI-based inflation is undeniable, many investors neglect to consider the risks they pose, particularly for those who have not yet reached retirement. The U.S. began issuing TIPS in 1997. Backed by the full faith and credit of the U.S. government and assurances that inflation cannot eat away at their value, TIPS seemed to be a truly risk-free asset for U.S.-based investors.
Pfau, Wade, "Are TIPS Really Safe and Worry-Free?" (2012). Faculty Publications. 168.