For investors inflation is the biggest risk, majorly for those investors who depend on fixed income. It means continuous increase in price of goods and services over the period. The purchasing power of money decrease as inflation increases. It means in future you buy fewer goods from same amount of money. Investors fail to protect themselves from this silent loss in many investments like fixed deposits and normal bonds. In this context, Inflation-Protected Securities solve this problem. It is bonds that adjust their value according to inflation. As compare to other normal bonds where principal and interest remain fixed, these securities change with inflation. In Inflation-Protected Securities the principal value of the bond increases according to inflation and interest of this security is calculated on this increased principal. Investors are able to protect the real value of their money over time because of this structure. In short, these securities assure investors that investment grows at the same rate of inflation, so purchasing power remains stable.

For investors inflation is the biggest risk, majorly for those investors who depend on fixed income. It means continuous increase in price of goods and services over the period. The purchasing power of money decrease as inflation increases. It means in future you buy fewer goods from same amount of money. Investors fail to protect themselves from this silent loss in many investments like fixed deposits and normal bonds. In this context, Inflation-Protected Securities solve this problem.