How to Beat Inflation

The rising food and energy prices are driving up the cost of living. Even safe investments are actually not so "safe" anymore. Even if you can see that your account balance is increasing, you could be actually losing if your money-market fund is paying less than the rate of inflation. Would you just continue to be a passive investor or try to beat inflation? Here are some simple steps you can take to improve your investments:

Shop around for higher-yielding CDs

Knowing all your available options is critical in investment management. Bankrate.com is a great site that can help you find and compare rates from banks around the country. Some small banks, in fact, tend to sweeten CD yields to compete with more well-known banks.

Switch to tax-exempt funds

You can save on your income tax by switching to a tax-free fund that buys short-term state and municipal-debt. Muni-debt interest is free from tax at the federal level and sometimes at the state level as well.

Switch to a fund that subtracts fewer expenses from the interest

Shop around and see whether you have been paying too many fees to your investment company. By switching to a lower-cost fund, you will be able to boost your returns quite a bit.

Buy government bonds with inflation protection

If you worry that inflation will get even worse, you can keep your savings safe from that by buying government bonds particularly designed to protect against inflation. There are two types of inflation-protected bonds you can buy: 1. I Bonds 2. Treasury Inflation-Protected Securities

Useful Links

Bankrate.com
Retirement Planning
Wells Fargo Advisor