The U.S. government sells two types of inflation-protected bonds, Treasury Inflation-Protected Securities, or TIPS, or Series I Savings Bonds.

But most people don't understand the difference between the two.

TIPS are just like other treasuries.

It's a large liquid market, and you can invest basically as much capital as you want into them.

They trade every day on the secondary market, and if you don't want to buy them individually from the government, you can even buy them packaged up in ETFs and mutual funds.

So they're very convenient for building a portfolio.

Series I Savings Bonds are built on the Savings Bond Program and have a lot of limitations.

You can only buy up to $10,000 worth of them online a year.

You have to hold them for one year before selling, and if you sell them before five years, there's an interest rate penalty.

However, the reason Series I Savings Bonds are such a good deal is because you cannot lose capital investing in them.

The government guarantees your principal back, whereas treasuries trade every day and can go up and down with interest rates and the markets.

And so it is possible to lose money investing in TIPS.

So depending on whether you're trying to build a portfolio or to stash away some money for the long term that is saved from inflation, you might either pick Treasury Inflation Protected Securities or Series I Savings Bonds depending on your situation.