By Ted Peroulakis
The government is going to have to print up trillions of dollars worth of new money in an attempt to break out of this economic crisis. That excess supply of currency in circulation is going to lead to what's known as "demand-pull inflation" - too much money chasing too few goods.
A good way to protect yourself from inflation is to purchase Treasury Inflation-Protected Securities (TIPS). They eliminate inflation risk - while providing a real rate of return guaranteed by the United States government.
Here's how they work: The Treasury uses the Consumer Price Index (CPI) as a guide to adjust the principal of a TIPS for inflation on a semiannual basis. A fixed interest rate is paid semiannually on the adjusted principal. In that way, both your interest payments and your principal are adjusted for inflation.
TIPS can be purchased directly from the government through its TreasuryDirect program and on the secondary market through banks and brokers.
My favorite way to invest in TIPS is to buy the iShares Barclays TIPS Bond-Exchange Traded Fund. It trades under the symbol TIP. This ETF has low fees, it is very liquid, and it holds a diversified portfolio of TIPS with varying maturity dates.
Bottom line: Protect yourself from inflation by having some of your portfolio in TIPS.
[Ed. Note: This is just one of the dozens of investment opportunities shared daily in ETR's sister publication, Investor's Daily Edge. Sign up for free right here.
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Larry Potter
http://www.youtube.com/watch?v=lkJCsIMAiNY
www.ATicketToWealth.com
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