Business and Personal Finance Dictionary

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• TIPS
  
  Treasury Inflation-Protected Securities are inflation-adjusted bonds issued by the U.S. Treasury. The principal is periodically adjusted for inflation, and the semi-annual fixed interest is paid on the adjusted principal. You pay tax annually on the interest payment. A drawback is that you also pay tax annually on the adjustment to the principal even though you don't receive the adjustment until you cash the bond.
  
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