We are selling our current property, and will be renting in the short term while looking for a property to purchase. We have some equity in the current property, so will get a payout at closing. To pick a round number, let's call this payout $100K.
We're not sure how long we will be renting, but it will likely be between 6 and 24 months. The goal is to hedge against inflation for the payout, as having that money lose value would be devastating to us financially.
My thought is that we would buy inflation protected treasuries (TIPS) and liquidate them when we purchase our next property.
- How does one buy this quantity of TIPS? Do you simply buy directly from the US Treasury?
- Is it cheaper to buy a fund that invests in TIPS?
- Since bonds can go up in value (and are likely to with rates this low), is there a way to measure potential downside?
- Can I mitigate downside risk by choosing different TIPS maturity?
- Is there some other strategy I should be considering to protect my cash against inflation (or maybe a mixed strategy)?
Edit: I should have specified that I am not concerned about regular inflation--I want to hedge against the risk of hyper-inflation.