TIPS, or treasury inflation protected securities, are bonds that do exactly what they are labeled to do. They protect the investor from inflation, and this is something that is very important. Now, for those of you who loves stocks and do not consider bonds as a worthwhile use of your time, consider this. Bonds, especially TIPS, offer you a pretty good return and protection against inflation. So, this brings to mind one valid question… what more do you want?

Many stock traders see stars in their eyes at the prospectively huge gains attainable on the stock market, but what they often overlook is the huge risk associated with this type of trading. One bad downturn, and all of your efforts could be rendered wasted and useless…. Not to mention, you could lose a LOT of money! Now bonds are not fool proof… if you are not careful, you can lose with bonds too. But bonds, while maybe not offering as much as stocks in the way of returns, offer you some protection and stability that stocks cannot ever offer, especially when you start looking at TIPS and how they differ from regular stocks.

Returns are definitely better on regular bonds as opposed to TIPS, but there is also that risk factor. How much is it worth to you to be protected from inflation? While deflation is possible, does it really seem likely? Some say yes, but this is not something that you probably want to stake your investments on. TIPS can offer you good returns at a minimal risk, and passing up an opportunity like that is just not profitable. That is why so many people are turning to these low risk bonds to add to their cash flow and diversify their portfolio.