I Bond, iBonds, i-Bonds or Series I bonds.
- clueless
- radiodude
- Normxxx
- clueless
- azxcvbnm
- radiodude
- azxcvbnm
- radiodude
- bob90245
- pbradford6
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» radiodude - Re: Ibonds
In response to message posted by clueless:Unless you need the cash for something else, I would keep them all. If you cash them in less than 5 years, you lose part of your profit, and although you don't ever pay a state/local tax on these, you will pay federal tax when you cash them in.
I would hold them. Some of them have a healthy fixed rate and should be paying quite well.
..
-- posted by radiodude
-- posted by clueless
» azxcvbnm - Fed made a huge mistake with I bonds and TIPS
I think the Fed make a huge mistake by ever issuing I Bonds and TIPS. TIPS completely eliminate the power of the FED to change the REAL rate of interest, which is the FED's most valuable and powerful asset. That's why the FED and the Treasury has had to constantly reduce the real rate on I bonds, as they are undermining the FED's policy of keeping real rates negative. In my opinion, the government should just make some excuse (CPI unreliable, the program costs too much, etc.) to end inflation indexed US Govt. debt. For the FED to give up their power to influence the economy would be harmful to the nation as a whole.-- posted by azxcvbnm
» radiodude - Re: Fed made a huge mistake with I bonds and TIPS
In response to message posted by azxcvbnm:azxcvbnm: hmmmm, but as a buyer of these things, I like 'em. I guess the limitaion of $30K / SSN per year limits the damage you cite somewhat.
I'm real happy with my holdings in I-Bonds. In fact, I feel better about these than anything else in my portfolio --- even if the returns have lagged other components lately.
On the other hand, I'm not crazy about TIPS for some reason -- in particular the TIPS bond funds. The duration is just too long for me right now.
.
-- posted by radiodude
» azxcvbnm - Re: Re: Fed made a huge mistake with I bonds and TIPS
In response to message posted by radiodude:You're right that they're definately a bargain for investors when the FED wants to artifically hold down the REAL rate of interest. TIPS and I Bonds will only be bad for investors when the FED wants to keep the real rate high to put a clamp on the economy. Of course holders of I Bonds could just cash out and buy regular bonds then. I have a lot of I Bonds too as they are definately a great buy for investors because of the ability of the holder to cash out anytime after 5 years without penalty.
-- posted by azxcvbnm
» radiodude - Are these worthwhile now.???
for all the usual suspects out there on Suite101:Yes, the rates are low, but for my "safe bucket" do you guys think these are worthwhile? FOr the past several years I have purchased the whole $30K per year, but I'm dragging my feet this year. If it makes a difference, emotionally, I love these things for the advantages I list below.
Advantages:
100% safe (but so is a CD)
no state/local tax
fed tax is deffered until cashed in.
inflation protection.
buy 'em and forget about them.
Disadvantages:
Low base rate.
The only alternative I find for this safe money is a 5 year CD at 4.4% from ING DIRECT.
-- posted by radiodude
» bob90245 - Re: Are these worthwhile now.???
In response to message posted by radiodude:If waiting is an option, maybe wait for higher CD rates. Myself, the last time I bought 5 year CD's was when they were above 5% in 2002. Barring a terrorist attack on US soil or similar TEOTWAWKI-type event, I expect 5 year CD's to rise above 5% in the next 12 months or so. As a historical benchmark according to Ibottson, intermediate bonds have averaged 5.3% over the previous 75-year period.
-- posted by bob90245
» pbradford6 - Re: Are these worthwhile now.???
In response to message posted by radiodude:I use my I bonds and some older EE bonds to self insure for long term convalescent care rather than buying an insurance policy. Over the years we have accumulated a little over $247,000. My wife and I have decided that we'll never touch them unless needed for long term care. I started buying EE bonds years ago and have regularly bought the I bonds since they were first issued. I don't know if I'll buy them this year unless the rate rises.
-- posted by pbradford6
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