"Allocate 5-10% to inverse ETFs (e.g., S&P 500 Put Options) or gold, which often performs well during inflation scares."

Allocating 5-10% of your portfolio to inverse ETFs or gold can be a strategic move to hedge against inflation and market volatility. Here's a detailed analysis to support this recommendation:

1. **Understanding Inverse ETFs**: Inverse ETFs, such as S&P 500 Put Options, are designed to decrease in value when the referenced index increases. They are a useful tool for hedging against potential market downturns. For instance, the iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a fee of 0.03%, which is relatively low, making it an accessible option for investors.
2. **Gold as a Hedge Against Inflation**: Gold is historically seen as a safe-haven asset and a hedge against inflation. Its value tends to rise when the purchasing power of fiat currency declines, which can happen during periods of high inflation. Central banks' increased purchases of gold and growing global demand further support its value as a reserve asset.
3. **Central Bank Gold Holdings**: Central banks worldwide have increased their gold purchases, with India, for example, raising its gold reserves to 12% of total foreign exchange reserves, up from 6.86% in 2021. This trend suggests a strategic shift towards holding gold as a hedge against potential economic and inflationary uncertainties.
4. **Historical Performance of Gold**: Over the past five decades, gold has risen during inflationary periods, making it a reliable asset to include in a diversified portfolio. Its performance is often counter to that of equities, providing a balance that can protect against portfolio erosion by inflation.
5. **Diversification Benefits**: Allocating a portion of your portfolio to inverse ETFs or gold can help diversify your investments. This is particularly important in times of economic uncertainty when traditional assets may not perform well. For example, during the early 2025 stock market correction, index funds were volatile, but steady investment can help build wealth over time.

In conclusion, allocating 5-10% of your portfolio to inverse ETFs or gold can be a prudent strategy to hedge against potential market downturns and inflation. These assets offer historical performance and diversification benefits that can help protect your investments in a variety of economic scenarios.