I Bond, iBonds, i-Bonds or Series I bonds.
- Thruhiker
- Thruhiker
- Thruhiker
- radiodude
- Normxxx
- radiodude
- duggi
- Normxxx
- radiodude
- duggi
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» Thruhiker - Re: Re: Re: U.S. AUGUST CPI UP 2.2% OVER 12 MONTHS
In response to message posted by Thruhiker:I wrote: "I-bonds use the CPI-U which over the last 6 months have changed from 184.2 to 185.2. If my math is correct the inflation portion for the next 6 months would be 1.09%."
I apparently can still use a calculator. The new I-bond rates are:
fixed portion 1.1%
fixed plus inflation rate 2.19%
-- posted by Thruhiker
» Thruhiker - Re: Re: Re: Re: Re: U.S. AUGUST CPI UP 2.2% OVER 12 MONTHS
In response to message posted by Kirk:Looks like everyone posted at the same time.
Bottom line, is a 1.1% real return fair? I don't think so, and I'm not going to purchase any more at these levels. By "gut sense" tells me that a fair real return is 2.0% but I don't have anything to objectively support my belief. Perhaps I'm spoiled by the 3.0%-3.6% real return I-bonds purchased earlier.
-- posted by Thruhiker
» radiodude - Article on I-bonds. "Everyone needs them"
I don't agree with everything in this article, but interesting nonetheless. The article seems to imply (but not directly state) that I-bonds change in value ------ they don't since they have no secondary market. The yields however do change based on CPI.http://story.news.yahoo.com/news?tmpl=st...
By Linda Stern
WASHINGTON (Reuters) - Tucking a few inflation-protected bonds into your investment portfolio will smooth out any bumps and earn you more money in the long haul, according to new findings by a professor at the Massachusetts Institute of Technology (news - web sites).
"It's almost like an apple a day keeps the doctor away," said S.P. Kothari, whose study was published recently in the Financial Analysts Journal. "... You might want to keep these indexed bonds in mind. They are often overlooked."
Inflation-indexed bonds are issued by the Treasury as I-bonds, or Treasury Inflation Protected Securities (TIPS), as well as by a few private companies. Because they adjust their interest rates to keep up with consumer prices, the so-called "real" rate of return on those bonds remains constant.
................snip.......
They found that inflation bonds zig when stocks zag, while other bonds sometimes follow stocks and sometimes go against them. Because of that purer negative correlation, investors who include those inflation-proof bonds in their portfolios can afford to keep fewer bonds and more stocks than they otherwise would. The bottom line on that mix is higher returns and a smoother ride.
The more conservative the portfolio, the stronger the effect. Adding inflation-proof bonds to a standard portfolio cut its risk by 13 percent. When the portfolio was a conservative bond-heavy mix, it doubled that risk reduction.
.....snip...... continues at link
-- posted by radiodude
» Normxxx - Re: Article on I-bonds. "Everyone needs them"
In response to message posted by radiodude:The article is not about I-bonds-- it is about TIPS. These are Treasury Inflation Protected Securities (issued at $1000 par for about 10 years) whose coupon is partly plain interest (fixed at the time of issue-- around 3%)and partly a value base on the CPI, which changes regularly. Therefore, the value of these bond does change (but much less than a regular bond) because of the fixed interest and changes in inflation expectations. However, you will get your full $1000 back plus the accrued inflation protection at maturity.
Be Warned: You are required to pay annual taxes on the inflation protection amount even though you will not get it until the bond matures in about 10 years.
See reference below for a fuller explanation:
-- posted by Normxxx
» duggi - Re: 3.39% for iBonds
In response to message posted by Kirk:Kirk, when the CPI-U for March came out a couple of weeks ago I figured out the new rate would be 3.49% if the base rate of 1.10% remained the same. So unless my math was wrong they must have chipped the base rate down to 1% even.
-- posted by duggi
» radiodude - To compare, EE-bonds are 2.84%
In response to message posted by Kirk:BUREAU OF THE PUBLIC DEBT ANNOUNCES SERIES EE SAVINGS BOND RATE FOR MAY THROUGH OCTOBER 2004
FOR RELEASE AT 10:00 AM EST
May 3, 2004
The Bureau of the Public Debt today announced the rate for Series EE savings bonds issued on or after May 1, 1997.
SERIES EE SAVINGS BOND RATE – 2.84%
The 2.84 percent Series EE savings bond rate is in effect for bonds issued on or after May 1, 1997, that enter semiannual earnings periods from May through October 2004. The rate is 90 percent of the average 5-year Treasury securities yields for the preceding six months. A new interest rate is announced effective each May 1 and November 1. A 3-month interest penalty is applied to these bonds if redeemed before five years. The Series EE bonds on sale now increase in value monthly. The bond's interest rate is compounded semiannually.
Savers and investors can now open an on-line account to purchase EE Bonds in electronic form through the website www.treasurydirect.gov. Account holders can purchase, manage, and redeem such EE Bonds over the Internet 24 hours a day, seven days a week. These rates also apply to electronic EE Bonds.
SERIES EE BONDS ISSUED BEFORE MAY 1997
Series EE Bonds issued before May 1997 earn various rates for semiannual earnings periods beginning between May 1 and October 1, 2004, depending on dates of issue. See the table on the back of this release for earnings on Series EE bonds issued from January 1980.
MATURED SERIES E SAVINGS BONDS AND SAVINGS NOTES
Series E savings bonds continue to reach final maturity and stop earning interest. Bonds issued from May 1941 through April 1964 along with those issued from December 1965 through April 1974, have stopped earning interest. All Savings Notes, issued from May 1967 through October 1970, have stopped earning interest. Series E Bonds with issue dates shown here will reach final maturity in the next six months.
E-Bonds Issued Stop Earning Interest
May 1964 through October 1964 May 1974 through October 1974
May 2004 through October 2004 May 2004 through October 2004
MORE INFORMATION
Information about savings bonds is available at Public Debt's website at www.treasurydirect.gov. Check out our Savings Bond Calculator to see how easy it is to find out what your bonds are worth, what they're earning, and even keep track of them. Or, download the free Savings Bond Wizard™ to keep track of your savings bond portfolio. The table on the back of this release shows actual yields for Series EE bonds. An Earnings Report, which contains rate and yield information for bonds is available by mail. Send a postcard asking for "Earnings Report" to Bureau of the Public Debt, 200 Third Street, Parkersburg, WV 26106-1328.
PA-648
-- posted by radiodude
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