A personal residence as a hedge against inflation is a sales pitch by realtors and I think it's nonsense. To begin with, here is a chart of the value of real estate in the Herengracht district of Amsterdam over four centuries, which I think might be the longest-term financial data series ever obtained:
Notice that the long term real return is on the rough order of zero, and that no matter how long an interval you take it is influenced enormously by the choice of starting points. And notice that the required "holding times" are long; after 1780 the value collapsed and stayed down for a century.
Of course people might remember 2006 in the U.S., too.
The other problem with a personal residence is that it is shelter. It isn't an investment. In addition to being a wildly speculative asset that undergoes sharp fluctuations, it's illiquid by its nature, but is extra illiquid because you are living in it. You can't rebalance it. You can't sell just a few shares of it (and buy a few shares in another house across town). If you think a $7.95 commission to sell an ETF is bad, or get annoyed at the 24 hours it takes to sell a mutual fund, compare it to the months it takes to sell a house, the realtor's commission, and the cost of moving.
And, no, absolutely not, a second mortgage or HELOC is not
equivalent to selling part of it--the bank has not become a business partner with you. You owe the bank a specific number of dollars, not 10% of the value of your house. The number of dollars stays the same even if the house drops in value. Again, recent history should make clear the danger of that thinking.
Meanwhile, in my opinion the mystery of TIPS is a smokescreen put up by people who don't make money when you buy them. What an individual TIPS does is dead simple, and if you buy at auction and hold to maturity there is no mystery about them at all. The market price of TIPS is a mystery of course, but so is the market price of anything. However, if you don't like TIPS because you (somehow) feel you can understand the market fluctuations of a stock or a junk bond but not a TIPS, then the obvious alternative is series I savings bonds, which are free from market risk.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.