Comments on: How to Protect Yourself From Inflation

By: C. Williams

C. Williams — Fri, 23 Apr 2010 13:29:37 +0000

The really only true way to stifle inflation is to not spend. Because the Fed and the Government have opened up the dam of the printing press it has inevitably put us all in a vacarious situation. If the economy starts picking up again and we start to see growth ie; spending then the inflation monster will raise its ugly head and everyone will be hurt except the Goverment because they were able to use the money 1st, prior to inflation. The devaluation of the dollar will in a sense tranfer wealth to the Fed because the initial lets say for a simple explanation, 100 dollars of printed money davalued by inflation of say 10% which is a realistic percentage, then 100 dollars will be worth 90 dollars leaving a 10% reduction in outlay caused by inflation. Therfore the Goverment pay 10% less when the bill comes due. However, consider a generation of this as we have seen and the value of the Goverments spending is reduced by half. We the people pay that difference in purchasing power.

By: JT

JT — Sat, 17 Apr 2010 13:10:42 +0000

The problem I see with using I-bonds for college savings is the interest on I-bonds is based on CPI, and college costs historically have risen faster than the CPI. College costs rise on average around 8% or so a year, whereas the CPI has historically risen closer to 3% a year. So even though I-bonds may do a better job of keeping up with inflation than some other bonds, you’re still losing buying power every year.

By: Shirley

Shirley — Fri, 12 Mar 2010 14:44:10 +0000

I did this by creating six 12 month CDs, one every other month. As each comes due, I roll it over if the rate % is good. So far I have been happy with this system, although it is not actually “laddering”.

By: Crawdad

Crawdad — Fri, 12 Mar 2010 02:39:47 +0000

Has anyone tried “laddering CD’s”. Check it out. I laddered a 1yr, 2yr, 3yr bump rate, 4yr and 5yr CD. In 5 years I will have a 5yr CD maturing every year. Within 5 years hopefully the rates will be much more than 3.5%.
Comments please.

By: aua868s

aua868s — Sun, 07 Mar 2010 17:53:26 +0000

I haven’t tried I-Bonds yet…with the way economy is, it should be worth the try.

By: eric

eric — Sun, 07 Mar 2010 05:36:08 +0000

I like I-bonds and TIPS the best.

By: thomas

thomas — Wed, 03 Mar 2010 02:21:16 +0000

Look at disaster areas like NOLA, Haiti, and Chile. Inflation, gold, and cash mean nothing if you don’t have a gun, water, and food.

Don’t forget to protect yourself from a natural disaster, not just an economic.

By: Jessica

Jessica — Tue, 02 Mar 2010 14:23:35 +0000

I don’t try to time anything in that sort of way. We started buying I bonds because we wanted to start a college savings fund and this was the option we liked the best. The interest is tax free if used for education, they are in our name and not our kids (because we don’t have any yet) and we won’t lose principle or value since they are tied to inflation. If rates go up, that’s great, if they go down, that’s fine too. If our kids don’t need the bonds for college then I will consider our portfolio diversified since we’re young and the majority of our retirement savings are in stocks.

One thing to keep in mind is that the I bond rates change every 6 months and are not constant. There are two components, one set at the time of purchase of the bond that is always the same (base rate) and one that adjusts every 6 months (tied to the inflation index) that are input into a formula to give you your earning percentage. The very same bonds earning 3.41% today were earning near 0% 6 months ago. Jim’s post about I bonds is pretty informative about the subject.

By: Shirley

Shirley — Tue, 02 Mar 2010 12:46:27 +0000

Routinely buy… such as groceries, utilities, gasoline?

By: basicmoneytips.com

basicmoneytips.com — Tue, 02 Mar 2010 11:40:15 +0000

I agree on most points that this article makes. I might lump some other commodaties in there as well, like oil.

A lot of people do not really understand the concept of inflation. Typically it is figured that inflation runs 3% annually, although lately it probably has not been that high. One of the best ways to gauge it unofficially is to watch the price of things you routinely buy.

By: saladdin

saladdin — Tue, 02 Mar 2010 11:07:43 +0000

Geez. I meant BB’s are only “worth” what you can convert them to. Sitting in your account they do no good.

saladdin

By: Nien Chang

Nien Chang — Tue, 02 Mar 2010 07:47:20 +0000

What about stocks in companies that book revenue in non-US dollar denominations? This could be a good hedge in case inflation really strikes here in the US. There are plenty of foreign companies that trade on US-based exchanges

By: Fred @ One Project Closer

Fred @ One Project Closer — Tue, 02 Mar 2010 03:22:49 +0000

Disagree. I converted my BBs for the latest copy of Quicken Deluxe (2010). I love it. Well worth every BB bid.

By: Fred @ One Project Closer

Fred @ One Project Closer — Tue, 02 Mar 2010 03:21:43 +0000

This literally made me laugh out loud. But actually, CK’s suggestion isn’t a bad one, if you’re really bought into high interest rates in the future.

By: saladdin

saladdin — Mon, 01 Mar 2010 23:48:44 +0000

Guilty.

BB’s are nice but they are worthless unless converted into an ING referral. It didn’t matter to me if it took 6 BB’s or 60 to get a referral.

saladdin