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1.
Treasury inflation-protected securities are backed by _______.
The US government. That adds an element of safety to inflation-conscious investors.
2.
Before you add commodities to your portfolio to hedge against inflation, what should you do?
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.
3.
Are stocks in general an indirect way to protect your portfolio from inflation?
Yes, because 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. Because of this, stocks have traditionally been used for inflation protection.
4.
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.
True. For example, emerging markets often have a lot of basic-material producers.
5.
If you want to add commodities to your portfolio to hedge against inflation, a good rule of thumb is to limit them to _______.
5-6%. Because they can be volatile, consider keeping them limited, especially if you are retired.