Inflation Protection for Stocks and Bonds With TIPS

A TIPS fund can shield investors from inflation to some extent, but so can other choices, like real estate, dividend-paying stocks and commodities.

Judged by their name alone, Treasury Inflation-Protected Securities would seem a cure for one of today’s main investor anxieties: inflation.

Alas, that name doesn’t tell all you need to know.

A mutual fund or exchange-traded fund that invests in TIPS can help prevent rising prices from eroding the value of your investment portfolio. And inflation is a worry today: It’s running at an annual rate of 7 percent, a level not seen since 1982. That’s when “E.T.” landed in movie theaters and Michael Jackson’s “Thriller” thrummed on radios.

But TIPS funds and E.T.F.s aren’t the best inflation fighters for every investor, and TIPS, a kind of bond issued by the U.S. Treasury, have complexities that belie their plain-as-boiled-potatoes label.

People assume “just because inflation goes up, you’ll do well” with TIPS, said

Keep reading this article on The New York Times Business.

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