I Bonds versus TIPS: Should Individual Investors Prefer One to the Other?

Arak, Marcelle and Rosenstein, Stuart

CFA Digest Vol. 37, Issue 3, p. 77-78

The article compares the features of the Treasury Inflation-Protected Securities (TIPS) and Series I Savings Bonds, two alternatives for investors hoping to avoid the negative effects of inflation on their portfolios without incurring credit risk, to determine the better after-tax alternative for the individual investor. Results reveal that TIPS enjoyed an 80 bps real return advantage over I Bonds.