As the federal government pours trillions of dollars of liquidity into the economy -- and rings up whopping deficits in the process -- more and more investors are bracing for a bout of inflation a year or two down the line. Gold, oil and other commodities are a traditional hedge against inflation, but there's a safer, if less glamorous, route: TIPS, or Treasury Inflation Protected Securities.

TIPS are Treasurys backed by the full faith and credit of the U.S. government, but the coupon payments and principal automatically increase to keep up with any rise in the consumer price index. Like regular Treasurys, TIPS offer the ultimate in principal protection. But unlike regular Treasurys, investors needn't worry that inflation will erode their real returns.

"There are some portfolio managers out there who consider [TIPs] to be truly the most risk-free investment," says Shashin Shah, president of SGS Wealth Management, a Dallas financial planning and investment management firm. "We're seeing increased interest in these products, especially with retirees. They want to maintain a certain buying level with what they have in cash and TIPS could potentially be one way to do it."

That said, TIPS won't make you rich. As the safest of safe investments the yields are paltry -- as of April 30 five-year TIPS were throwing off just 1.2%. There's also the caveat that as inflation rises, so too will interest rates. Higher rates equal lower bond prices. That's not a problem if you hold TIPS to maturity (nor is deflation, since the principal is guaranteed), but it remains to be seen whether the CPI adjustment would offset a decline in bond prices. After all, TIPS have only been around since 1997, so they've never been tested in a prolonged, high-inflation environment.

Investors can purchase TIPS directly from the federal government on the TreasuryDirect web site. The minimum investment is a hundred bucks and there's no fee. The downside? Taxes, says Kirk Brown, managing director of trust and alternative investments for American Beacon Advisors and portfolio manager of American Beacon TIPS Fund (ABTPX) .

"The problem with an individual buying TIPS is that the inflation adjustment must be recognized on an annual basis and the tax must be paid on an annual basis even though you haven't received those dollars," Brown says. For example, if inflation ran at 3% a year, you would receive a $30 adjustment on a $1,000 bond. You would owe taxes on that adjustment but wouldn't actually receive the $30 until the bond matures.

Buying TIPS through a mutual fund avoids the tax problem associated with purchasing bonds directly. Furthermore, funds such as American Beacon TIPS, Fidelity Inflation-Protected Bond Fund (FINPX) and Vanguard Inflation-Protected Securities Fund (VIPSX) are cheap with low initial minimum investments. "They're also actively managed with a wide mix of maturities," says Shah, making them more suitable for socking away larger portions of cash. And that active management might also help you eke out slightly better returns.

The downside? Risk. An actively managed TIPS fund might yield better returns, but as with any fund, there is no principal protection.

The lack of principal protection also applies to exchange-traded funds such as iShares Barclay TIPS (TIP), SPDR DB International Government Inflation-Protected Bond ETF (WIP) and SPDR Barclays Capital TIPS ETF (IPE) . On the plus side, these ETFs are more liquid than mutual funds, have no minimum investment and -- in some cases -- are cheaper than their actively managed counterparts. A negative is that as passively managed index funds, TIPS ETFs can't offer a better return than their benchmarks.

Be it through direct purchase, mutual funds or ETFs, TIPS offer the ultimate in safety, and very well may deserve a place in your portfolio. No, they won't make you rich, but they'll let you keep what you have, and that's no small feat in these turbulent times.