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September 15, 2011
Your Money: Inflation-Protected Securities

CHICAGO — Inflation affects us all. Even when it is coasting along at what might seem to be a harmless rate, it eats away at the buying power of the dollar.

When inflation hits 11% as it did in 1979, and then rises to 13.5% as it did in 1980, the world of investing, saving and spending is turned upside-down. That’s why some financial professionals are concerned about the most recent trend. After finishing 2010 at an average rate of 1.6%, the first five months of this year show an average of 2.64%, with the latest month in that period hitting the 3.6% mark.

Could this be the portent of sky-high inflation such as we saw in the 1970s? There is a growing amount of evidence that would suggest that possibility. The chief villain, according to many economists, is the Federal Reserve’s easy-money policy designed to support the government’s $2.2 trillion in stimulus spending. That, in addition to the rise in other government spending, has skyrocketed our federal debt.

August 16, 2011
Your Money: Leaning Toward Alternative Investments

CHICAGO — Judging from my e-mail, it’s not difficult to find savers and investors who are questioning the conventional wisdom when it comes to investing their money. With the stock market on an erratic, volatile course that seemingly leads nowhere, and yields on cash investments such as money markets and CDs almost nonexistent, more and more income-seeking investors are breaking the old rules by dipping a toe in waters they would have considered too risky a few years ago.

Instead of sticking to the philosophy that calls for portfolios laced solely with a careful mix of quality stocks, well-rated bonds and cash, these hardy souls are venturing into eyebrow-raising investments such as junk bonds, commercial real estate, options like puts and calls, and equities in emerging markets in an effort to improve the anemic and unpredictable returns they’ve been enduring of late. According to one adviser, taking on even a little more risk requires overcoming fear of foreign markets.