Where do you see this?
In news articles about financial planning and newsletters from banks and insurers.
What does it mean?
Issued mostly be governments, these inflation-linked bonds are simple instruments that work like any type of bonds: The holder gets a fixed coupon payout yearly.
But unlike other bonds, these inflation-linked bonds pay rates that are linked to the current inflation rate - also known as "real yields".
Why is it important?
Inflation-linked bonds were first issued by the British government in 1981.
According to HSBC, the market for such bonds has ballooned from US$100 billion in 1997 to more than US$1.8 trillion (S$2.3 trillion) last year, which represents an annual growth rate of 23 per cent.
Many wealth managers considers such bonds to be an important part of one's investment portfolio, as they protect against capital-eroding inflation.
So you want to use the term. Just say...
"Inflation-linked bonds are awesome as they give you returns that protect your capital against rising prices."
invest, The Sunday Times, July 15 2012, Pg 36