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Comment by sb057 | Hacker News Reader

One very straightforward investment are Treasury Inflation-Protected Securities, or TIPS. They're adjusted to meet CPI, so that does mean trusting the BLS will be honest with their assessment. Very poor investment most of the time (their real return is typically lower than the already low return of standard Treasurys), but in an inflationary environment can prove wise to have.

Additionally, commodities will almost by definition track inflation.

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I've been buying Series I Treasury Bonds (I Bonds) for the past few years. They're currently yielding a fixed rate of 0% for up to 30 years from purchase, which above the market rate for TIPS for periods from 5 to 30 years. Both TIPS and Series I bonds track CPI-U. They never lose nominal value, but can't be sold on the open market.

The main downsides of these Bonds are that they are limited to purchases of $10,000 per calendar year, they can typically only be purchased electronically from Treasury Direct, they can't be redeemed for the first year, and have a three month interest penalty if redeemed in the first five years.

I'm mainly purchasing them for a portion of my emergency fund, but they're an interesting long term investment, since they currently offer a guaranteed return significantly more than TIPS held to maturity.

The CPI understates inflation. Do you eat out? Go to grocery stores. Calculate you personal inflation rate. For me it seems to be 10% to 15%.

Hence my caveat about the BLS having to be honest. That said, while they do massage the CPI numbers (hedonic adjustments making cars cost the same over a 20 year period being the worst example), it has been historically vaguely accurate.

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