What are inflation-linked bonds and how do they work?
Inflation-linked bonds are fixed-income securities designed to protect investors from inflation. Their principal value increases with inflation, ensuring that the purchasing power of the investment is maintained.
What are the benefits of investing in these bonds?
The main benefits include protection against inflation, stable income, and lower risk compared to stocks. They can be a good addition to a diversified portfolio.
Are there any risks associated with inflation-linked bonds?
Yes, risks include interest rate risk, as rising rates can decrease bond prices, and inflation risk if inflation is lower than expected.
How do I invest in inflation-linked bonds?
You can invest in them through government bond offerings, mutual funds, or ETFs that focus on inflation-linked securities.
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