In a heavy bottomed pot, combine the milk, water, sugar, cinnamon and rice. Then stir to mix.
Bring to an intense simmer (just below boiling) over medium heat, stirring often. Then reduce the heat to a steady simmer and continue cooking for 30-40 minutes stirring every few minutes to prevent sticking.
When the rice pudding has the consistency of a thin oatmeal or porridge, remove from heat and stir in the vanilla extract. Add raisins, if using them.
Spoon the pudding into individual ramekins, small containers or a large serving dish.
Let the pudding cool slightly before serving or let cool to room temperature, cover and refrigerate until ready to serve. Refrigerate uncovered if you prefer a firm top of skin.
Just before serving, garnish with cinnamon or brown sugar. Enjoy warmed or cool.