From Kiplinger · · 1m 10s
How to Shield Your Nest Egg from Inflation
Combining inflation hedges like TIPS, gold, REITs and cash protects retirement savings from rising costs.
In brief
Combining inflation hedges like TIPS, gold, REITs and cash protects retirement savings from rising costs. Using TIPS, gold, REITs and cash together shields retirement savings from inflation without exposing investors to rising interest rates. Originally reported by Kiplinger.
The Retirement Threat
Rising prices erode purchasing power year after year while longer lifespans mean your money needs to last longer.
No Single Solution Exists
There isn't a single solution to protect your portfolio from inflation and longevity risks.
TIPS as Inflation Hedge
Treasury Inflation-Protected Securities adjust for the Consumer Price Index to beat inflation but have tax implications and are sensitive to interest rates.
Gold and Commodities
Gold and commodities like oil can hedge inflation but may not reflect actual experienced inflation due to market dynamics.
REITs and Infrastructure
Real estate investment trusts and infrastructure investments like pipelines may rise with inflation but are sensitive to interest rates.
Cash as Inflation Hedge
High-yield cash instruments produce real returns over time but are vulnerable to rising interest rates.
Combining Hedges
A prudent approach combines inflation hedges to enhance protection while minimizing exposure to rising interest rates.
The headline
Using TIPS, gold, REITs and cash together shields retirement savings from inflation without exposing investors to rising interest rates.
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