What is security protected by the Ministry of Finance?
Security affected by the Ministry of Inflation (TIP) protected by the Ministry of Finance used by the US Ministry of Finance to finance public debt. At the same time, securing the protected by the Ministry of Finance offers the protection of investors from fluctuations up and down that come with inflation. These securities are also called securities indexed by the Ministry of Finance. Offers can also be placed through a government bank, broker or seller. Data auction for cash bonds and state -cash registers are announced in large newspapers and online press releases on the department's website. Investors can also subscribe to e-mail notifications.
Inflation is an increase in the costs of goods and services. As inflation increases, the basic amount that the investor puts in the cash register protected inflation, known as the director, at the same time increasing to the same as an index of consumer prices (CPI). On the other hand, during the deflation period when prices are falling, it also decreases.
CPI is a weighted diameter of the basket of consumer goods and services. It is used to measure and reduce life costs for consumers. Although the CPI has experienced some volatility over time, the protected cash register protection is considered to be a safe investment, because the principal is not endangered when CPI cycling down. If the deflationary pressures cause the regulated director to fall below the original amount of the investment, the original principal is paid in full with a maturity.
But for this mind is a compromise. Price securities protected by the Ministry of Finance (TIPS) offer a lower return. The US Treasury provides the page index index of online tips index to help you calculate changes to the principal according to CPI changes.
Treasures protected by securities protected by inflation pays interest every six months at a fixed rate and pays to the main investor after maturityI mature in terms of 5 years, 10 years and 20 years. For example, a 10 -year note on tips may have a half -year interest rate of 4 percent or 3.875 percent, with yields of 4.075 percent or 3.937 percent.
Interest on the inflation of the cash register is exempt from state and local income taxes, but is subject to federal income tax. The federal income tax on interest payments applies to the year when the interest is received. With regard to growth in principal, federal income tax is paid in the year.
Security protected for inflation can be kept to maturity or selling before due date. The director can be used to purchase another security. Investors do not have to take any special steps to apply tips. The SURAD TREAODATION will automatically insert the director into a previously designated bank account.