Keeping Money Safe and Protected from Inflation

Kimberly Watson, Editor in Chief
August 16, 2012 /

There are various options for those who have retired with a reasonable sum of money and are seeking safe investments without being subjected to the scourge of inflation and keeping money safe. However, a primary consideration is whether to distribute a portion of the available funds to any intended beneficiaries before your demise.  Apart from the personal satisfaction of being present to see the direct benefits provided by your bequest, there are also certain potential tax benefits.

Because of the present limitations, you and your spouse are able to gift up to $26 thousand each year to any person and conform to tax regulations.  However, if this is not suitable then there are alternative methods of protecting your investment against inflation and the volatility of the economy and keeping money safe.

One of the usual methods is the obvious investment in the stock market, but a negative aspect to this is that the security of your principal sum would be conceded.  Although diversification through the purchase of more extensive stock categories, for example index would help you, the volatility associated with the investment would remain.  Alternatively, you do have the option of safety form investing in money market funds, U.S. Treasury Securities or Bank Certificates.  Although they are considered incomparable for keeping money safe you do not have the capability of maintaining the rate should there be an inflationary rise.

The combining of the two options by the development of a broad group stock portfolio and a broad group of bonds money market funds could help with the solution to keeping money safe. However, a consideration that must be taken into account is that both ambitions related to the investment would not be achieved. For example; if you made a fifty-fifty division you would achieve keeping money safe in half the account, but it would not keep up with inflation. The other half would probably maintain the inflation rate but could be subjected to fluctuation in value.

A method that could address both needs including keeping money safe is to invest in Treasury Inflation Protected Security bonds or “TIPS”. You have the added protection of them being supported by the United States government.


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