The Inflation Fighters - REITs & TIPS

According to Benjamin Graham, author of the famous book "The Intelligent Investor" and mentor of Warren Buffet. The 2 inflation fighters are REITs and TIPS

REITs - Real Estate Investment Trusts

These are companies which collect rent from the commercial and residential properties and distribute to its share holders. They are bundled into real-estate mutual funds. When the inflation rate is higher to the returns received from the famous index funds, these REITs play a major role in beating the inflation

The rent collected from the properties also rise as per the inflation rate in the country. Hence the amount received matches the expenses. These will not decrease the purchase power of any investor due to inflation

TIPS - Treasury Inflation-Protection Securities

These are US government bonds, first issued in 1997 that automatically go up in value when inflation rises. All treasury bonds are safe from the risk of defaults. TIPS also guarantee that the value of your investment won't be eroded by inflation. TIPS will make sure you will not suffer from the financial losses or loss in purchasing power on what ever the inflation is. The catch related to this TIPS are taxes. When the value of TIPS rises, the taxes will play its role as well. So TIPS are best suited for the tax deferred retirement accounts

Have a Great Day
B G Nareshkumar

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