Robert Zingale

Why You Need TIPS in Your Retirement Account

Old Trader, your point is well taken. However, the most gaming by the government is done in the housing category. They like to use renters equivalent in the CPI index instead of a broad housing price index like the Case-Shiller Index. I do not think that the excess money will be pumped back into housing this time, so I think the effects of inflation will be felt in the CPI index. You are exactly right about the gaming. If you replace the renters equivalent measurement with the Case-Shiller index, inflation would have averaged around 1% more each year since 2003. I had the exact number and graph, but my other computer crashed. The calculation can easily been done if you are interested in doing it yourself. I do think the government does game CPI with the renters equivalent and hedonic pricing measures that they use. At the same time, TIPS are an efficient way of protecting your money. You don't have to put all of your money in them of course.


On Sep 21 08:24 PM Old Trader wrote:

> Given all of the reasons that its in the government's interest to
> "game the system", when it comes to computing the rate of inflation,
> I wouldn't be terribly comfortable pinning all of my inflation "protection"
> on a slug of TIPs in my portfolio.