Honey's Brinker Beehive--Not a Fan Club

Top 97. Oct 26, 2005 1:02 PM

» Kirk - Re: I-Bonds and Taxes

In response to I-Bonds and Taxes posted by honeyoneohone:

I own tips in my IRA and they indeed go up and down in value unlike IBONDs that have a constant but rising value once they hit a year. Before a year, you can't sell them whereas you can sell a TIP fund any day (as long as you follow the short term trading rules and perhaps pay a trading penalty.)

and

FWIW, I've not spoken on this, but some people have ALL their taxable money in equities so they get the LTCG advantage and they have all their Fixed Income in tax deferred accounts.

IF they don't want to sell equities to buy an I Bond, then I Bonds are like adjustable CDs and don't fluctuate with interest rates as TIP funds do. I can't see how it would hurt to put them in a ROTH, but finding someone who will let you do this could be hard since they can't charge a fee from anyone. I'd call my premium broker and ask if I really wanted to do this. I'm happy enough with TIPS where I can do a bit of market timing on interest rates to try and buy on days when rates are high, like today where I added another $10K to my IRA TIP fund from money funds for a minor adjustment. I took a my money in that "explore" IRA out of bonds some time ago and have now been using periods of high rates to make DCA moves back in. I was up several percent on my last TIP buy before this recent correction ate most of it up...

-- posted by Kirk

Top 98. Oct 26, 2005 1:13 PM

» Kirk - Re: Opposing Opinion: Brinker, I-Bonds and IRAs

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In response to Opposing Opinion: Brinker, I-Bonds and IRAs posted by honeyoneohone:

"Ifish": .I-Bonds pay interest upon maturity, so you get principal and interest when the bond is sold or matures. That's all you get. TIPS, as Brinker and I know, have the same inflation protection AND they pay interest SEMI-ANNUALLY.

I am trying to not call people morons or fools, but this guy is dangerous and should not be allowed to speak from any authority where people might believe his nonsense. Thank goodness he isn't posting here!

From the Treasury Direct Site:

4. When are earnings added to the I Bond?
I Bonds increase in value each month, and interest is compounded semiannually. I Bonds increase in value on the first day of the month. An I Bond's issue date is the month and year when the full issue price is received by an I Bond issuing agent.

A major distinction between I Bonds and TIP funds is you can’t lose money in I Bonds but TIP funds go up and down with interest rates.

Read all about I Bonds here Frequently Asked Questions about I Bonds on the web site for the US Treasury.

-- posted by Kirk

Top 99. Oct 26, 2005 2:35 PM

» honeyoneohone - Re: Opposing Opinion: Brinker, I-Bonds and IRAs

In response to Re: Opposing Opinion: Brinker, I-Bonds and IRAs posted by Kirk:

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Thank you for the info, Kirk...

As I said--that was just an "opposing" viewpoint from someone who claims to follow Brinker. I attributed no "authority" to him and warned my readers to draw their own conclusions on the subject.

I think it might be helpful for my readers to know how easily it is to be misled by Brinker. Many of his followers have lost money by not questioning what Brinker recommends. That is one reason why I am looking for the possible answer to why Brinker told his caller not to use I-Bonds in her IRA.

The moral of the story is: Brinker isn't infallible.

-- posted by honeyoneohone

Top 100. Oct 26, 2005 2:38 PM

» ostinker - Re: Link to Brinker's Rant and Rave

In response to Link to Brinker's Rant and Rave posted by honeyoneohone:

i pulled up this link and got an hour of some talk show in Cal.

it ran all the way to the end of the top of the hour news , but no Brinker....

-- posted by ostinker

Top 101. Oct 26, 2005 3:51 PM

» honeyoneohone - Re: Link to Brinker's Rant and Rave

In response to Re: Link to Brinker's Rant and Rave posted by ostinker:

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So sorry you missed it, ostinker--that is a time limited link. I think it runs for only 24 hours.

-- posted by honeyoneohone

http://www.publicdebt.treas.gov/sav/sbii...

Top 102. Oct 26, 2005 4:03 PM

» honeyoneohone - Brinker, I-Bonds and IRAs: The Real Scoop

In response to Opposing Opinion: Brinker, I-Bonds and IRAs posted by honeyoneohone:

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It seems as though "basher52" has the definitive answer about I-Bond. Now if the-Brink ever talks about them again, we will all be able to judge how accurate is his advice. smile

"You must be talking about a different type of I-bond than I am. I was referring to the one issued by the US treasury. Interest on these bonds are compounded semiannually.
From the link below;
4. When are earnings added to the I Bond?
I Bonds increase in value each month, and interest is compounded semiannually. I Bonds increase in value on the first day of the month. An I Bond's issue date is the month and year when the full issue price is received by an I Bond issuing agent."

Just a point of clarification as posted by "force-majeure":

From I-Bond website:

"Generally increases in value monthly and interest compounds semiannually (except in periods of deflation when the bond value could remain unchanged). Interest is paid when the bond is redeemed."

http://www.publicdebt.treas.gov/sav/sbie...

http://www.publicdebt.treas.gov/sav/sbir...

http://www.publicdebt.treas.gov/sav/sbif...

http://www.publicdebt.treas.gov/sav/sbii...

-- posted by honeyoneohone

Top 103. Oct 26, 2005 4:03 PM

» suwarrow - Re: Re: Opposing Opinion: Brinker, I-Bonds and IRAs

In response to Re: Opposing Opinion: Brinker, I-Bonds and IRAs posted by Kirk:

Hi: I'm new at this, so bear with me, but since an I bond is an accrual type vehicle, and you do not have access to the accrued interest that's developing in the bond until you cash it in, don't you lose the opportunity to reinvest and gain interest-on-interest, if you will?
If instead, the interest stream is available to you, as in a TIP(or am I wrong about that?) can you not reinvest the interest and gain interest-on-interest along the pay out life of the bond? Wouldn't a TIP therefore bring a higher yield than an I bond, all other things being the same? Thanks, anyone out there>>>

-- posted by suwarrow

Top 104. Oct 26, 2005 4:41 PM

» Kirk - Re: Re: Re: Opposing Opinion: Brinker, I-Bonds and IRAs

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In response to Re: Re: Opposing Opinion: Brinker, I-Bonds and IRAs posted by suwarrow:

Good question. I Bonds are really simply 6 month "liquid CDs" that have a fancy forumla to decide how much interest they will pay you for the next six months. Like CDs that mature in 6 months and don't pay you interest until the 6 months are up, they automatically roll over into a new 6 month period unless you cash them out. Unlike CDs, you can't cash them out for any reason for a full year. Between years 1 and 5 you pay a 3 month interest penalty. After 5 years, they are just like a checking account where you can pull whatever you need at any time straight into your linked checking account at your bank from your PC. The goal would be to eventually get all your fixed income that you have in regular CD ladders into I Bonds so you get the good tax treatment and great rates. Then, as you need cash to spend, just pull it from your 5 year or older I bonds untile it is gone... then start on the next one... that is hopefully 5 years old. They are VERY, VERY cool if you use them correctly for people with a great deal of cash this is usually in CDs.

Don't forget, you can buy $30,000 a year at your bank too... then you can convert them to electronic form later on... but the idea of having some local appeals to many.

Remember, you can lose money in TIPs and TIP funds because these are bonds. If rates go up enough, it can more than offset the interest you are paid, unless the rates go up due to inflation. They are not the same as I Bonds. Since they do index for inflation, I think they are great buys now and I bought $10,000 worth today in my personal IRA (one of my explore portfolios) as I tried to catch what I hope is an interest rate spike.

You can see the TIP fund goes up and down in value much like a regular Government bond index fund.

Hope this helps.

-- posted by Kirk

Top 105. Oct 26, 2005 9:04 PM

» honeyoneohone - Brinker's I-Bond's Advice Stirs up Hornet's Nest

"Math Junkie" said: "I think that's true if the amount you want to invest in inflation-protected bonds is within the dollar value of your Roth IRA, but if you want to invest more than that, then wouldn't the best plan be to buy TIPS in the Roth IRA and I-bonds outside it? "

Will L. Responded:

"Sure, there's more than one way to skin a portfolio. I have no qualms at all with doing it that way. Indeed I have invested quite a bit into I-bonds in private money. I had a plan for them at the time that seemed to make sense.
However I think there is a lot to be said for having your fixed income in a Roth account that NEVER is taxed, and equities, perhaps high dividend paying ones in a private account where the appreciation is very favorably treated along with the dividend income under current tax laws.
For most there will be a day of reckoning on the I Bond interest in private accounts, therfore to me given the low interest rates currently available, the long maturity you would have to select in TIPS to match the income stream, I think Ibonds in a Roth would be a good idea and equities in private accounts. You could not use 60k in a current year Roth contribution anyway--have to sell something to buy that much in I bonds.
But since I've never done that, I certainly don't claim it's for everybody. I just think Brinker was caught up in his dogma and didn't consider the question adequately."

-- posted by honeyoneohone