Two Options to Fight Off Inflation

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Total returns for TIPS, according to the Lehman Brothers U.S. TIPS Index, were up 10.09 percent year to date as of Thursday. Brennan said investors are "buying for the inflation security."

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That instinct might have been heightened by last week's news of sharper increases in consumer prices and in the producer price index.

Barry Glassman, senior vice president at Cassaday and Co., a financial planner in McLean, said he thinks TIPS and I Bonds have not been popular because inflation has been so benign. "Fewer and fewer investors remember double-digit inflation," he said. But if investors are concerned about inflation, "they should consider TIPS as part of an overall diversified portfolio."

For investors who want to save beyond the tax-deductible limits for IRAs and 401(k)s especially, it seems that I Bonds might be a good choice. And Bodie suggests that they might also be a better place to stash emergency funds -- the three to six months' worth of expenditures financial advisers recommend setting aside to prevent incurring credit card debt in a crisis.

I wonder if I have enough nickels, dimes and quarters.

Join Martha M. Hamilton and Zvi Bodie, professor of finance at Boston University and co-author of "Worry-Free Investing," for an online chat Tuesday at noon.

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