One thing that gives some confidence in reasonably honest CPI index (Used to adjust principle value of TIPs) is that the Social Security payments are also adjusted annually by The CPI and for next 25 years or so the voting baby boomers will make politic pressure to demand government not play excessive games with the CPI. Also TIPs do have always full face value even if US were to sink in a deflationary period (negative changes in the CPI) I.e. TIPs have a floor under them. Terrible deflation would be a benefit / increase in purchasing power for recently purchased TIPs at least. I recently posted last week’s Treasury interest rates on regular issues and TIPs, pointing out both that the rate curve is rapidly growing steeper; (which I take to mean many now think the dollar will collapse in less that the long term. China has publicly expressed that fear and is buying real assets much more than it was) and that the "insurance cost" of TIPs is quite modest now,* IMHO, for the protection you do get. See that post at: http://www.sciforums.com/showpost.php?p=2248670&postcount=49 SUMMARY: I like TIPs for holding dollar based assest, but best held in tax-defered fund (like IRA or 401 or 403 b) as otherwise the interest (perhaps the step up in principle?) is annually taxed even though not recieved. Mine are in TIAA/CREF & Vanguard's inflation protected funds but they hold about 20 or 25% non US TIPS so you have some diversification and active management for only about 0.2% annual fee. ---------------- *Mainly, I think because with current deflation fears people think: Why buy inflation protection?