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Portfolios 406: How to Inflation-Protect Your Portfolio

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1.
If you are interested in adding commodities to your portfolio to hedge against inflation, you should first check to see if any of your existing investments have some commodities exposure in them.
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True. For example, emerging markets often have a lot of basic-material producers.
2.
Treasury inflation-protected securities are backed by _______.
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The US government. That adds an element of safety to inflation-conscious investors.
3.
Before you add commodities to your portfolio to hedge against inflation, what should you do?
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Both of the above. Emerging markets tend to be heavy on basic-material producers, and they in turn are beneficiaries of higher demand and prices. And although owning energy stocks is not the same as owning commodities directly, energy stocks have a fairly high correlation with energy prices.
4.
Stocks are an indirect way to protect your portfolio against the threat of inflation.
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True. Stocks have the potential for higher returns than bonds, and inflation will take a smaller bite, in percentage terms, out of your future purchasing power.
5.
When a TIPS bond matures, what does the bondholder receive?
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The bonds original value or the value adjusted upward for inflation, whichever is greater.