These bonds protect against inflation. How to optimize them for your portfolio

Investors' inflation fears are reawakening as oil prices resume their ascent and peace talks between the U.S. and Iran remain tenuous. A bond that adjusts for higher consumer costs might be what it takes to assuage some of those worries. President Donald Trump on Saturday called off plans to send U.S. envoy Steve Witkoff and Jared Kushner to Pakistan for negotiations. However, the president and his national security team on Monday discussed a proposal from Iran to reopen the Strait of Hormuz if the U.S. lifts its blockade, White House press secretary Karoline Leavitt confirmed. The uncertainty around next steps was enough to push oil prices higher to kick off the week. International Brent crude oil futures topped $110 per barrel on Tuesday, while West Texas Intermediate futures hovered near $100. Higher oil prices are igniting worries over sticky inflation, which can devour the purchasing power of investors' dollars, particularly if they're approaching retirement. This is where Treasury inflation-protected securities, or TIPS, enter the picture. "I think the nice thing about the TIPS ladder is that you can have a lot of certainty in cash flows," said Jason Kephart, senior principal, multi-asset strategy ratings, at Morningstar. "They're coming in and they will be adjusted for inflation." Relatively safe income that can keep up with inflation The principal of a TIPS bond can fluctuate over its term based on inflation, and you receive interest income twice a year. …