Answer to Question #279600 in Finance for rohan

Question

Inflation has remained low for the past three years but you have come to the conclusion that trend is ending and inflation will increase significantly over the next 18 months. Assume you have reached this conclusion prior to other investors reaching the same conclusion. What adjustments should you make to your bond portfolio in light of your conclusions

Answer 1

• Bonds are a vital component of a well-balanced portfolio.
• Bonds produce higher returns than bank accounts, but risks remain relatively low for a diversified bond portfolio.
• Bonds in general, and government bonds in particular, provide diversification to stock portfolios and reduce losses.
• Bond ETFs are an easy way for investors to gain access to the benefits of a bond portfolio.