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I don't agree to RRbond purchases now. Look at the historical graphs. The yield on RRbond is now 1.65%. That is right down at the lowest historical value. An upside move in yields is more likely than an further downside. Yields up = prices down.

Their price fell during the crash because the market say a long-term depression with deflation (reverse of inflation). You don't buy fire insurance during a flood.

Personally I do not see inflation in the cards in the forseeable future so I am not positioning my portfolio to hedge it.

But that said, your comment that you can live off your (fixed I presume) pension worries me. Unless you are sick you may well live 30 years. Inflation most definitely WILL erode that even if the inflation is only 2%. You should not be spending all of it now, but rather reinvesting some to counter that erosion.
 

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To address what I consider some of your misperceptions:

"When inflation would rise the yield of RRBonds would be automatically adjusted to the inflation." When the Consumer Price Index rises, the Face Value of the bonds rises equally, and the the coupon$ payment rises as well. But that bigger coupon remains the same percentage of the now larger face value. So the coupon RATE does not change with inflation.

Of course there are market actions that change the 'yield to maturity' that is what is graphed on the BkOfCda site. The value of the security is impacted by BOTH these factors - the inflation impact on the face value and the market impact on yields.

The best (and only) place to explain how they work is at Shakespear's:
http://www.bylo.org/rrbs.html
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"The XRB price went up 10% in the first 9 months of 2008 while the stock market was declining." You should not presume from that the two securities are negatively correlated, or that RRbonds provide protection from stock crashes.

At the start of the year RRbond prices reflected a 2.75% yield. If you look at the graphs (the 3rd proved the closeup view) you see that yield was the highest in a long time. (High yield = low price). Since then it has fallen to 1.65% yield. That is a difference of 1.1 percentage points. Since RRbond have a high duration (say 15) you would expect a 15% rise in security value from the change in yield PLUS the negative 1% due to the negative CPI.
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The comment on real-estate is a good one. It has the attributes of covering half of your living expenses (rent) from before-tax income , growing both the rent coverage and asset value by inflation (over the long run), and being a store of value to either leave to heirs or pay for long-term care.

The problem is that for single people at lower tax rates, those attributes lose a lot of their ooomph. And RE securities are not a substitue. And RE does not protect from inflation over short periods. See the graphs at the bottom of this page.
 
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