Hedge Against Inflation

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Hedge Against Inflation

To take steps to limit the reduction of the value of an investment due to inflation. Inflation decreases the value of money such that an investment's return is not worth as much as it might have been when the investment was made originally. Hedging against inflation helps reduce this pressure. Examples of hedging against inflation include buying commodities such as gold or purchasing an inflation-protected security, in which the return is linked to the inflation rate. See also: Real Rate of Return.
References in periodicals archive ?
1970) made a portfolio of common stock and found that common stocks are not hedged against inflation.
Rapach (2002) examine the relationship between real stock prices and inflation and their result show that inflation does not corrode the long run real value of stocks means stocks are hedged against inflation.
After retirement, savings will be the only income for most and, therefore, it's all the more important that they be hedged against inflation.