Inflation-Proof Investments Are Attractive

The current economic climate is making inflation-proof investments appear more attractive to individuals with funds to place, it has been claimed.

BusinessWeek explains that inflation can have "pernicious" effects on an investor's portfolio.

However, with TIPS - Treasury Inflation-Protected Securities - the federal government will guarantee that the value of the funds will increase in line with inflation.

Readers are warned, though, that governments around the world could ultimately be responsible for driving inflation higher in the coming months.

BusinessWeek suggests that this could happen if governments choose to begin printing money in order to ease economic pressures in their own countries.

With more money in circulation, the publication predicts that prices could be expected to rise accordingly.

Even without more money being printed, the combination of bailout packages and lower interest rates could drive inflation higher in the near future.

Should this be the case, TIPS may prove a wise investment for portfolio managers looking to safeguard their savings against the changing wider economy.

BusinessWeek previously listed the interplay of inflation and deflation as one of its five main trends to keep under scrutiny during 2009.

The publication added that it is likely that deflation will have "the upper hand" between the two price trends over the early part of the year.