TIPS Real Yield Calculator
Compare TIPS real yield to a nominal bond.
Enter your values
ⓘ Live results
Results
- Breakeven inflation rate
- 2.3%
- TIPS wins if inflation is above
- 2.3%
- Value if inflation = breakeven (2.3%)
- $30,470.04
- Value if inflation is 1pt higher (3.3%)
- $33,520.75
Quick answer
TIPS pay a real (inflation-adjusted) yield, while nominal bonds pay a yield that includes expected inflation — the gap between them is the market's breakeven inflation expectation.
Nominal yield ≈ real yield + expected inflation
How to use the TIPS Real Yield Calculator
- 1Enter the TIPS real yield and a comparable nominal Treasury yield of the same maturity.
- 2The breakeven inflation rate is the difference between them.
- 3TIPS outperform if actual inflation exceeds the breakeven rate; nominal bonds win if inflation runs below it.
Worked example
Using the values the calculator loads with:
Inputs
- TIPS real yield2 %
- Nominal Treasury yield4.3 %
- Investment amount20000 $
- Holding period10 years
Results
- Breakeven inflation rate2.3%
- TIPS wins if inflation is above2.3%
- Value if inflation = breakeven (2.3%)$30,470.04
- Value if inflation is 1pt higher (3.3%)$33,520.75
Frequently asked questions
What is breakeven inflation?
It's the inflation rate at which TIPS and nominal Treasuries of the same maturity would produce equal returns.
Are TIPS taxed differently?
Yes — the inflation adjustment to principal is taxable in the year it accrues even though it's not paid out until maturity, in a taxable account.
About this calculator
- Built and reviewed by James Whitfield · How we build and test calculators
- Report an error
Results are estimates for general information. For medical, legal, structural or financial decisions, confirm with a qualified professional.