Right now, you may be a bit concerned over the possibility of future hyper-inflation. If you are looking for an easy way to secure your cash, you may want to consider US treasury inflation protected securities or TIPS.
TIPS are an excellent way to protect your money against inflation because they adjust with inflation. The United States Department of Treasury actually issues tips in increments of $100. You can purchase tips with a maturity date of 5, 10 or even 20 years. There is little risk associated with owning Tips because they are backed by the US government.
With Tips, you principal amount adjust according to inflation. It is adjusted using the Consumer Price Index or CPI. The CPI basically measures the change in cost of living such as the prices paid for certain products from month to month. In escense, when the CPI goes up, your principal amount will increase. The opposite is also true.
In addition, Tips pay a bi-annual return of a specified percentage based on the amount of time that you agree to leave your money in. Although this may only be a couple percent, you must look at the overall return of the adjusted principal and the given interest rate.
Author: John Zinsky
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