With the 30-plus per cent returns we got in the last few years, we assumed immunity to the inherent short-term risk that the product called equity carries. Now that the world battles the latest financial crisis and Indian stocks are off by almost a quarter, it is a great time to rebuild your portfolio in case you were using just equity (in the form of equity funds or direct stocks) and debt (in the form of your Employees Provident Fund, Public Provident Fund and fixed deposits) in it.

Now that the dizzying Sensex is not blinding us anymore, we can look at introducing a third investment vehicle that reduces risk and provides stability to our portfolio.

The stability comes from it being a great hedge against inflation -- it may not give returns like equity can, but will keep the money's head over the inflation trend line (see Market Record).