Strategy Intermediate: How to Inflation-Protect Your Portfolio

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1.
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.
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.
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.
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.
Are stocks in general an indirect way to protect your portfolio from inflation?
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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.