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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.
If you want to add commodities to your portfolio to hedge against inflation, a good rule of thumb is to limit them to _______.
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5-6%. Because they can be volatile, consider keeping them limited, especially if you are retired.
3.
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.
4.
What is the major reason for stocks being good inflation hedges?
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Their potential for high returns. Their returns can be potentially higher than those of bonds.
5.
TIPS bonds _______ are regularly adjusted to reflect changes in inflation.
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Principal values. The principal values are adjusted as needed; this, in turn, will affect the interest payments that are made.