I-bond definition

An inflation-index bond, issued by the U.S. government, with a value ranging from a minimum of $50 to a maximum of $10,000 and a 30-year maturity. Inflation-indexed bonds were issued beginning in 1998 as a hedge against inflation. I-bond holders have a tax-deferred investment. Bondholders receive a fixed rate of interest and then they receive an extra interest rate payment that is based on the rate of inflation, which is indexed to the inflation rate as calculated by the consumer price index. Also called TIPS, which is short for Treasury inflation-protected securities.