Inflation-indexed bonds are a type of fixed-income investment that helps protect against inflation risk. These bonds are designed to adjust their principal and interest payments based on changes in the inflation rate. The bond's value rises along with inflation, which also increases interest payments. As a result, investors aiming to maintain their purchasing power over the long term may find inflation-indexed bonds to be a useful tool. Bonds that are inflation-indexed can be a significant component of a portfolio of investments as a hedge against inflation. They can aid in balancing the risk of other inflation-sensitive fixed-income investments. Also, these bonds offer a consistent income stream and might be a refuge during turbulent economic times.
The role of inflation-indexed bonds in an investment portfolio.
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