12 Ways To Beat Inflation With Your Portfolio

The Fed may quickly subdue inflation, or it may fail. Here are some devices to protect your retirement savings in case of failure.By William Baldwin, Senior Contributor

Inflation is here to stay for a while. At 3%, a moderately pessimistic estimate of where it will settle, it doubles the cost of living over 24 years. At 4% it would quadruple costs over the course of 36 years, which is maybe how long the money you put in your retirement account today will sit until you spend it.

Herein are a dozen antidotes to inflation. They vary greatly in their response to a rising CPI but they have this in common: risk. There is, alas, no way to combat the risk of runaway inflation without taking other risks.

Diversification will help there. Use these in measured doses and use more than one. And pay attention to costs. Attached to each investment recommendation is a price in basis points, a basis point being 0.01% of annual holding cost ($1 a year per $10,000 invested).

Inflation Fighters
Treasury Inflation Protected Securities guarantee to make you whole when the cost of living goes up. These government bonds pay a real yield, which is to say, a yield above and beyond the annual rise in the Consumer Price Index.

TIPS yields vary with maturity and are just above 2% for the longer-term issues. Your principal a …

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