[HN Gopher] I Bond's variable rate will rise to 9.62% with the M...
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I Bond's variable rate will rise to 9.62% with the May reset
Author : hnburnsy
Score : 107 points
Date : 2022-04-12 18:13 UTC (4 hours ago)
(HTM) web link (tipswatch.com)
(TXT) w3m dump (tipswatch.com)
| lesgobrandon wrote:
| hnburnsy wrote:
| Best part...
|
| >While waiting for the May 1 reset might look tempting to launch
| directly into the 9.62% rate, I still strongly recommend buying I
| Bonds before April 30, which will lock in a 7.12% rate for a full
| six months, followed by 9.62% for six months. That's an annual
| rate of about 8.4%, and there is no other very safe investment
| that can match that return.
|
| >I Bonds must be held for 12 months before you can redeem them.
| If you redeem them before five years, you will forfeit the last
| three months of interest. But if you buy near the end of April
| 2022, you will get full credit for April and can redeem 14 months
| and a few days later, avoiding taking the interest penalty on the
| 9.62% rate.
|
| >However, I always recommend buying I Bonds every year up to the
| purchase cap of $10,000 per person per year and holding them
| until you actually need the money. People who have been buying I
| Bonds for years -- like many of my readers -- are very happy
| right now, collecting an annual rate of 8.4%, plus any fixed rate
| attached to the original purchase.
| [deleted]
| UncleOxidant wrote:
| There's also a fixed yield part of iBond interest. Currently
| that's 0%, but perhaps it will be something around 0.5% due to
| the Fed raising rates? That could be an incentive for waiting
| until May to buy.
| Thrymr wrote:
| That was also addressed in the article:
|
| > Will the I Bonds's fixed rate rise on May 1?
|
| > I still say "no," but conditions are getting better for a
| fixed rate higher than the current 0.0%. The real yield of a
| 10-year TIPS has now "surged" to -0.12%, an impressive rise
| of 85 basis points since the beginning of the year. But until
| it gets to at least 0.25%, I think it's unlikely the Treasury
| will increase the I Bond's fixed rate. We might see the rate
| rise in November, which would be available to grab when the
| calendar resets in January.
|
| > My advice: Don't be waiting for a higher fixed rate that
| might never come, and miss out on the chance to make $840 on
| a $10,000 investment in one year. Invest up to the cap before
| May 1.
| eloff wrote:
| Do you have to be a US citizen to purchase these?
| medler wrote:
| No but you need a social security number and to be a US
| resident
| mahesh_rm wrote:
| Can a Delaware C-Corp buy them?
| prepend wrote:
| Only if it has a social security number and is a US
| resident. (Ie, no since c-corps don't have socials)
| [deleted]
| vosper wrote:
| [you may purchase] if you have a Social Security Number and
| meet any one of these three conditions:
|
| - United States citizen, whether you live in the U.S. or
| abroad
|
| - United States resident
|
| - Civilian employee of the United States, no matter where you
| live
|
| https://treasurydirect.gov/indiv/research/indepth/ibonds/res.
| ..
| nullc wrote:
| When i-bonds have a fixed rate of zero they are guaranteed to
| under-perform inflation since you still must pay federal income
| tax (not even LTCG) on their increase in nominal value.
|
| An i-bond needs to have a fixed rate of at least 0.27% to cover
| the interest on the 2% target rate of inflation, assuming a 12%
| income tax rate. If inflation was sustained at 9% the i-bond
| fixed rate would need to be 1.2% to make it not lose value.
|
| I-bond is an interestingly alternative when you'd otherwise just
| hold cash, but with the fixed rate of 0 it's not _that_ exciting.
| Other than cash few other investments are _guaranteed_ to lose
| money relative to inflation.
|
| I would avoid buying I-bonds with a fixed rate under 0.5% and
| certainly under 0.2%.
|
| ... and that's entirely without getting into the argument that
| the government systematically underestimates inflation e.g. by
| CPI-U having an open-loop correction for substitution.
| mint2 wrote:
| Its interesting when it's the best of the bad options for a
| cash reserve.
|
| CDs, tbills, etc all are worse.
| tbirdz wrote:
| It's worth noting that I bonds are exempt from state income
| tax, and you pay federal income tax at the time you redeem the
| bond, not at the time you get interest, so it's federal income
| tax deferred. You could potentially hold onto the I bond for up
| to 30 years before being forced to redeem, so you could wait
| until you're in a lower tax bracket, which makes it better.
| oceanplexian wrote:
| While 9% sounds attractive, I'm doubt that real inflation is
| anywhere near that since the government is so obviously fudging
| the #'s. Look at asset prices, rent, food, home values, and
| basically anything that actually matters, and it's probably
| double the return on these.
| dgrin91 wrote:
| I decided to go in and buy some I-Bonds for the first time. To do
| this you need to make an account with
| https://www.treasurydirect.gov/. My god this was a shockingly bad
| experience filled with security theater.
|
| * Passwords must be at least 8 chars, but can't be longer than 16
| (they don't tell you the max length though * Passwords can't have
| \ * Passwords are case-insensitive * When you actually try to log
| in they make you use a virtual keyboard - meaning you have to use
| your MOUSE to click each individual character which is shown on
| screen in plain text. The keyboard does not work on purpose, and
| password manager don't work either.
|
| From their security FAQ - > Virtual Keyboard: The virtual
| keyboard is one of many security features introduced in
| TreasuryDirect as part of our on-going commitment to heightened
| password and account security. The advantage of using the virtual
| keyboard is that others are deterred from learning your password.
|
| It reminds me of that video from a while back of UX designed by
| the devil. I know its government, but what an awful experience.
| vorpalhex wrote:
| Last time I saw virtual keyboard as a security feature, it was
| in an early 2000s Korean MMO filled with bots...
| Macha wrote:
| Dublin bike hire does it, including shuffling the numbers. I
| could almost understand it at the terminals at bike hire
| points, but they do the same on their web interface.
|
| Of course the real insecurity is they assign you a fixed
| numeric 6 digit PIN.
| missedthecue wrote:
| I don't get why it's so bad. I've had to use the UK government
| website system for my residence visa and it was a breeze. The
| US department of the treasury gets $22 billion to spend every
| year on administration.
|
| That's $220 billion per decade. Surely they can shell out a
| crazy $5 million every ten years for a usable site refresh?
| christophilus wrote:
| The site looks like Sharepoint. I didn't bother to check that
| it is, though. If it is, $5 mil is not enough to put a nice
| UI on that pig.
| kn0where wrote:
| Welcome to the United States. The dysfunction is real. We
| spend lots of money on dumb stuff, but we can't agree on
| where to spend it better.
| dangle1 wrote:
| Yeah, when I first registered I was amazed in a bad way about
| the website.
|
| Then I kind of wanted to learn the history of how this was
| created for a guaranteed head-shaker.
| JoblessWonder wrote:
| It is so bad. So, so bad.
| stevenwoo wrote:
| I have tried three browsers to get an irs.gov login and none
| works completely, there's a failure on one step or another and
| they are using some third party login service.
| jdavis703 wrote:
| Are you using ad blockers, tracking protection or enhanced
| browser security? Consider using a stock Google Chrome
| installation from a desktop computer.
|
| I'm not defending the "good enough for government" mentality
| but merely suggesting some workarounds (FWIW it works on my
| computer.)
| christophilus wrote:
| It's astonishingly bad. I right clicked the input and put my
| password in via the browser console. Much easier.
|
| Also, better not forget your security questions twice, or
| you're going to be on the phone with an absolutely atrocious
| hold experience.
| matthewaveryusa wrote:
| re virtual keyboards: thwarts physical keyloggers. it thwarts
| kernel keyloggers too, but if you have a kernel keylogger
| kernel mitm is also a possibility (minus bandwidth costs.) eons
| ago I had an hsbc card with random digits sent to me. the hsbc
| login asked for a random subset of the digits on the card +
| password which would thwart short-lived mitms -- thinking back,
| that was pretty clever
| jamie_ca wrote:
| Sounds like what Canada Revenue Agency has up now as well,
| their 2FA setup gives you a 5x5 grid of random 3-letter
| combos, and when logging in they'll ask you for a specific
| three of them.
|
| Honestly it's a PITA (I need to keep said PDF vaguely handy,
| and it's stored less securely than in my password manager).
| ihattendorf wrote:
| Yeah it's pretty bad.
|
| To enter password via keyboard/paste: right click password
| element -> inspect -> remove the `readonly="readonly"`
| attribute.
| ethereathan wrote:
| I found that it works to right-click the password field input,
| inspect and edit the html element, and paste my password from
| my password manager into the "value" property before
| submitting.
|
| It's still annoying, but I think it beats using their virtual
| keyboard.
| pcurve wrote:
| I actually gave up because the registration failed on me
| multiple times, citing they're not able to verify my identity
|
| They're still using security image!! (which to this date I
| still don't know what it does)
| mwint wrote:
| They told me the same thing, and then I added my driver's
| license number and it let me through...
|
| ... and then they sent me an email saying my account needs
| additional verification. They want me to fill out
| https://www.treasurydirect.gov/pdf/rs/acctauth.pdf - which
| somehow doesn't load in the browser, but works with wget -
| which would require me to sign it in the presence of a
| "certifying officer".
|
| Yeah, jumping through all these hoops isn't worth even 10%
| interest on $10k.
| hobs wrote:
| If its the same implementation I am familiar with, its to
| proffer something unique to the user that they are familiar
| with that a phisher would likely not have, though of course,
| they could make a request to the provider as you as soon as
| you offer your username lol.
| vehementi wrote:
| Wait how do they implement case insensitive passwords? Do they
| to_lower() it on the client?
| thfuran wrote:
| By forcing you to type using an onscreen virtual keyboard.
| mason55 wrote:
| Possibilities
|
| 1. They store your plaintext password and then compare
| _to_upper()_ of your stored password against what you enter
| on the virtual keyboard (which only supports uppercase
| letters).
|
| 2. They _to_upper()_ your initial password, before they salt
| /hash, and test the salted hash against the salted hash of
| whatever you type on the virtual keyboard
|
| 3. Either one of the above but with an additional
| _to_upper()_ on the password you enter at login so that if
| you do manage to type the password using your keyboard
| instead of the virtual keyboard it 's still case insensitive.
| jjoonathan wrote:
| It crashed Chrome right after I hit "submit" on the purchase.
| Nice!
|
| After logging in again and seeing $0.00 everywhere, I found a
| transaction list showing that a purchase request went through.
| Hopefully the amounts will update tomorrow!
| nanidin wrote:
| When I called in to reset my password last year, they read the
| answers to my security questions back to me...
| bombcar wrote:
| I Bonds are a great way of "saving" for a large purchase, as they
| _roughly_ keep pace with inflation so you are effectively saving
| real dollars.
|
| Fun fact - you can still get paper I Bonds if you request your
| tax refund be sent that way. https://www.irs.gov/refunds/using-
| your-income-tax-refund-to-... - this is the ONLY remaining way to
| get paper I bonds.
| Trasmatta wrote:
| Or using it as your emergency fund. Just keeping in mind that
| you should probably ladder your emergency fund into them, since
| they're locked up for 1 year.
| Dwolb wrote:
| Yup especially if you have a larger emergency fund meant to
| last >12 months.
|
| Any dollars you don't need >12 months should definitely be
| put in.
|
| Can decide on drawing down emergency fund + increasing risk
| on the incremental dollars after.
| mywittyname wrote:
| It's not much of an emergency fund if it's locked away for a
| year.
| [deleted]
| bombcar wrote:
| That's the point of the ladder - after a year or two you
| can access much of it at anytime. Buy 1k this year and 1k
| next year, and your accessible emergency fund is 1k - but
| from then on it grows 1k a year if you keep purchasing;
| only the last purchase isn't immediately available.
| mywittyname wrote:
| I understand that, but think about the trade-off:
|
| I am potentially earning $40-80 on interest over a year,
| but I lose access to $1000 ear-marked specifically for
| emergencies.
|
| If it's truly an emergency, then you're better off with
| $1000-inflation. Maybe get a high-yield savings account
| and split the difference ($20/yr, but access at any
| time).
|
| I will concede that people have different definitions of
| "emergency" funds. I see it as, $500-1000 sitting in an
| account to deal with things that need to paid for now or
| else bad things will happen. So sudden car repairs and
| the like.
|
| Other people call six months of wages an emergency fund.
| For these people, yeah, a ladder makes a lot of sense,
| but that's mostly because they never really expect to
| need the entire amount immediately (thus, IMHO, not
| really an emergency fund).
| kube-system wrote:
| The liquidity requirement of an emergency fund varies
| based on the amount of savings capability a person has,
| and the type of emergency they want to save for.
|
| Someone living paycheck to paycheck will likely need 100%
| liquidity, and someone who is wealthier might only need a
| single-digit percent liquidity.
| cma wrote:
| Start with an emergency fund, do this in place of
| investing on top of it, then after it is laddered replace
| the emergency fund with this and invest the former
| emergency fund (or gradually replace things over time as
| the lockup frees up).
| mywittyname wrote:
| It's still so much work and risk for almost no gain.
|
| I have $1000, so I split it up $500 in cash, $500 in a
| bond. Next month, my car needs new tires or I can't get
| to work. New tires are $800, and I can't afford that half
| my emergency fund is tied up. I lost shifts at work
| because of this, but at least I got a $30 return (never
| mind each lost shift cost me $70).
|
| Emergency funds are for high impact, unpredictable
| events.
| wonnor wrote:
| You're not understanding. You always have $1000 of non-
| tied up funds. Start with $1000 cash. Then, instead of
| investing your next $500, put it in bonds. After a year,
| remove $500 cash from the emergency fund and invest it.
| You now have an emergency fund of $500 cash and $500
| withdrawable bonds.
| avgDev wrote:
| Emergency funds are a safety net when everything is
| crashing and you lose your job. This way you don't need
| to sell off your stocks which would be lower if there was
| a crash. Otherwise, you would be realizing your loses.
|
| You seem to be looking a this from a someone that is
| young angle and doesn't have much expenses. My expenses
| are high, therefore my emergency fund is high. I keep
| $40k in cash, if can move $20k to I-Bonds that is $1600 a
| year. No other place will GUARANTEE that return. It took
| me all of 15 minutes. If you can offer me a greater
| GUARANTEED return I'm all ears.
| jdmichal wrote:
| I think the concepts of "emergency funds" being discussed
| are different here. There are the $1000 "I need cash now"
| emergency funds. Then there are the 6-12 month "I lost my
| job" emergency funds. I think you're discussing the
| former, while others are discussing the latter.
|
| I agree with you that you should not put the former in
| anything less liquid than a savings account.
|
| The latter, however, lends itself very nicely to
| laddering months of savings over months of layered
| investments. So that every month, the next month of your
| savings becomes free.
| seibelj wrote:
| Don't forget you have to pay income taxes on the money
| the government inflated away from you!
| thfuran wrote:
| As opposed to a high yield savings account, which didn't
| give you interest in the first place but would've also
| been taxable if it had.
| prepend wrote:
| The alternative is a 0.1-1% money market fund. So getting
| $50/year vs $1 isn't a huge amount, but it's something.
|
| Since you, hopefully, don't ever use your emergency fund,
| adding $1000 a year for decades adds up.
|
| Of course rates won't always be this high for I-bonds and
| so low for MMA, but you get the idea.
| ihattendorf wrote:
| When people suggest using I bonds as emergency funds it's
| usually recommended in addition to at least a few
| thousand that remains in a savings/checking account for
| immediate withdrawal.
| [deleted]
| Trasmatta wrote:
| That was the reason for the second sentence of my post
| jjoonathan wrote:
| How long does it take to get the money out after the lockup?
| Typical ACH 2-3 days?
| bombcar wrote:
| Correct, though if you go the paper route via tax returns
| you can "cash" the paper bonds at any bank at any time (or
| maybe it has to be a bank you have an account with
| already).
| Trasmatta wrote:
| Yes, but the thing you have to be careful of is if you
| switched banks. They require you to jump through hoops to
| update your bank on TreasuryDirect. So if you change banks,
| you should begin the process to update with TD right away,
| so you don't get a nasty surprise if you need to cash out
| quickly in the future.
| orev wrote:
| Getting paper Ibonds this way is also a way to bypass the 10k
| annual limit for an individual. You can use a tax refund to
| purchase an additional 5k within the year, enabling a total of
| 15k per year.
| intrasight wrote:
| Does it makes sense perhaps to over pay taxes and then use
| the refund this way?
| koolba wrote:
| When they're paying 9.62% it certainly does.
|
| You'd have to do it preemptively though as the last
| opportunity to over is via a Jan 15th estimated tax
| payment. You can't retroactively overpay, the money needs
| to be there before you file your taxes.
| tbirdz wrote:
| You don't have to make an estimated tax payment. You can
| also file an extension, and when you do that you can make
| a payment with IRS direct pay as well. Also just because
| you filed for an extension, that doesn't mean you have to
| file your tax return later, so you can just file your tax
| return when you would regularly payment. You can file for
| an extension much later than Jan 15th, I think the
| deadline is sometime in April.
| bombcar wrote:
| Definitely do NOT misfile your return such that you get a
| large refund as I Bonds and then file a corrected return
| where you pay back. It's not legal and it's not worth it.
| zeroonetwothree wrote:
| Unfortunately you can only save a pretty small amount, so
| something like a house downpayment doesn't really work.
| spacemark wrote:
| Couples filing jointly can buy $20k/yr, not an insignificant
| amount for normal people. There are ways to get more, like
| gifts, trusts, tax returns.
| [deleted]
| Panther34543 wrote:
| These seem like one of the best investments to make right now,
| considering the current inflationary environment. How does one
| purchase these bonds?
| gte525u wrote:
| The treasury direct website.
| lordofmoria wrote:
| I was so happy to have found I bonds in the last few months.
|
| This does beg the question - is there any other "safe, relatively
| liquid" option that has even close to the same yield as I Bond?
| Seems like traditional bank savings and short term CDs are still
| well below 1% everywhere.
| UncleOxidant wrote:
| Not currently. Maybe if we see interest rates rise
| significantly we'll see some attractive rates on 10 year
| treasuries? I think if the 10 year goes over 6% I'm going to
| start buying them.
| arcbyte wrote:
| Anchor protocol is paying 19.5%.
| arcticbull wrote:
| Yeah that has a somewhat different risk profile. A series I
| bond risk profile is basically 0 risk. Anchors risk profile
| is roughly "oh my good sweet buttered Christ what are you
| thinking?!"
| buzzy_hacker wrote:
| Short-term TIPS. The shorter duration means more responsive to
| inflation and less sensitive to interest rate risk.
|
| https://institutional.vanguard.com/iam/pdf/ISGCTIPS.pdf?cbdF...
| Apes wrote:
| In theory, but not in practice. Inflation is up over 8% YoY,
| but short term TIPS are down over 2% - for a realized loss
| against inflation of over 10% on what should be a "safe"
| asset class:
|
| https://www.google.com/finance/quote/VTAPX:MUTF?sa=X&ved=2ah.
| ..
|
| The longer they exist, the more it feels TIPS are a sucker's
| bet.
| Spellman wrote:
| It's a very different thing to compare a fund vs holding
| the actual certificate. Same with the Bond Mutual Funds vs
| holding a Bond.
|
| The Funds will decline because you have to sell old Bonds
| at a discount to buy up the new higher interest payout
| bonds. But if you held on to the original bond, then you'd
| still get the fixed payout. You'd just miss out on the
| opportunity of the new higher payout bonds on the market.
| christophilus wrote:
| I think TIPs are in the 4% range. Not close, but still pretty
| high based on recent ranges.
| oceanplexian wrote:
| I would just buy stocks and keep rolling LEAPs (long dated
| options) to cover the downside risk of different scenarios.
| Then you can fine tune exactly the risk you want to take and
| the premium you want to pay. I-Bonds are not that attractive
| and the rates are not great when you take into account
| inflation. Plus there are a million ways to get a better tax
| outcome with stocks, tax privileged accounts, loans, tax loss
| harvesting, etc.
| gte525u wrote:
| Closed end bond funds - but their price hasn't been stable
| lately due to pricing in expected rate increases.
| Trasmatta wrote:
| One thing to keep in mind is that the I Bond rates will go way
| back down once inflation does. So it's great as an inflation
| hedge, but other assets will almost certainly out perform them
| in the long run.
|
| Still worth getting the yearly $10k though.
| lotsofpulp wrote:
| Assuming VOO will get bailed out by US government in the
| event of a decline/stagnation within the timeframe of a few
| years, then I would go with $10k in VOO over $10k in I bonds
| every year due to the lower long term capital gains tax rate
| for VOO as opposed to paying regular income tax rates on
| interest income with I bonds.
| Trasmatta wrote:
| Buying I Bonds is more about diversification, and / or
| having a liquid emergency fund that doesn't lose value to
| inflation (after the 1 year lock up).
| UncleOxidant wrote:
| Keep in mind that you don't have to pay state income tax on
| iBond interest which is an advantage if you live in a state
| with a high income tax.
| orev wrote:
| Market funds are a very bad place to keep money that might
| be needed soon. Ibonds provide a safer place to keep funds
| you might need in an emergency. You should never have
| emergency funds in the market.
|
| Also, assuming a government bailout will come to the rescue
| is a pretty risky strategy.
| lotsofpulp wrote:
| I bonds are also not for funds needed soon. I see some
| utility for them for funds that might be needed after 12
| months, but before whenever one feels comfortable that
| public equity markets will be bailed out. They do sound
| like a good option for those that want to be prepared for
| emergencies 12 months into the future.
|
| >Also, assuming a government bailout will come to the
| rescue is a pretty risky strategy.
|
| Of course, this is just my opinion, but I feel like it is
| risky to not assume a government bailout. As far as I can
| see, the options are bailout of public markets, or
| revolution.
| mint2 wrote:
| I'd really hope people are planning in advance for
| emergencies. It's not an emergency if one knows it's
| coming next month.
|
| Everyone should have some emergency plan or fund if at
| all feasible.
| ljhsiung wrote:
| You don't pay tax on I bonds if they are directed towards
| educational expenses for you or your child.
|
| Compare this with a 529, which serves a similar purpose.
| Then this just reduces to a stocks vs. bonds argument, but
| for your kid's education. Do you value safety or STONKs
| then?
|
| Also, I find changing beneficiaries for an I bond is easier
| than a 529, in the event whatever beneficiary doesn't
| pursue college (a decision I understand more these days),
| but IANAIA (I am not an investment advisor?)
| chockablock wrote:
| Unlike a 529 plan, the tax benefit of using I-Bonds for
| tuition is only available if your AGI is under a certain
| amount in the year you cash them in (currently $154k for
| a married couple).
| https://www.investopedia.com/ask/answers/111414/what-
| educati...
| ljhsiung wrote:
| You can rollover the I-Bonds to a 529 to bypass that AGI
| phaseout. https://www.savingforcollege.com/article/how-
| to-rollover-us-...
| lotsofpulp wrote:
| That is interesting, thanks for the info!
|
| Also, I am not exactly sure what you mean by "STONKs",
| but if one's investment timeline is on the order of
| years, all the history I see shows broad market equity
| index funds to be pretty safe.
| gizmo686 wrote:
| No. There is a reason you are limited to $10k a year. I bonds
| are not a financial product being sold for the benefit of the
| seller. They are a government service being provided for the
| benefit of the buyer.
| gotaquestion wrote:
| Kinda sound like a wanker here, but if I can only by $10k of
| bonds... that works out to about $500 after taxes in a year.
| Not a whole heck of a lot, or do they retain the 8% for
| however long you hold the bond? (e.g., 10 years?) Meaning at
| 7.2% in 10 years I'd have 20k?
|
| EDIT: Thanks for the replies. TIL.
| pedrosorio wrote:
| > that works out to about $500 after taxes in a year.
|
| https://www.thebalance.com/tax-advantages-of-series-i-
| saving...
|
| 1) No state tax on I-bonds
|
| 2) You can defer and pay tax on the interest only when you
| sell the bonds (which means you can time the sale to when
| you have lower income)
|
| > or do they retain the 8% for however long you hold the
| bond?
|
| No, the interest rate is updated every 6 months, see the
| sibling comment.
| armchair_ wrote:
| The interest rate gets changed every 6 months depending on
| the CPI. The $10k limit is per year - so if you hold on to
| those bonds you can potentially have $300k invested in
| total.
|
| As the parent comment stated - this isn't meant to get
| anyone rich. This is the government providing a service
| that allows (working-class) individuals to keep a rainy-day
| fund relatively insulated from risk. If you're able to save
| more than 10k per year, you're not the primary target for
| this service.
| zeroonetwothree wrote:
| No they have a rate that adjusts to match inflation. So
| after 10 years you will have exactly the same amount as you
| started with in real dollars (actually less because of
| taxes...)
| cplex wrote:
| "Not a whole heck of a lot" but at virtually zero risk.
| This is for the portion of your portfolio that you don't
| risk at all.
| gizmo686 wrote:
| The bonds last up to 30 years, and you can buy the yearly
| max every year regardless of how much you own. However,
| they do not have a fixed interest rate. Every 6 months, the
| rate is set to match inflation.
| atwebb wrote:
| The second one (but in theory it is still that same
| purchasing power since it is keeping with inflation).
|
| There's some rules on if you cash out before 5 years (you
| give up the last 3 months of interest) and you MUST hold
| for 12 months.
|
| You can ladder them too and have different amounts / times
| of purchase.
|
| I like it for planned emergency funds that would otherwise
| be cash, ladder into it so you always have your EF
| available.
| HWR_14 wrote:
| I'm still not sure that doing so before May 1 is the way to go.
| Jumping straight in seems better if you assume that inflation
| isn't going below 7.5% by November
| pcurve wrote:
| Just heads up, your money is locked in for 5 years if you want to
| avoid paying penalty.
|
| Before 5 years, you forfeit interest from the previous 3 months
| which isn't terrible, assuming the variable rates remain
| competitive.
| mynameishere wrote:
| Like war bonds, I suppose if these became popular, they could
| have the effect of actually reducing inflation. Very temporarily.
| ceeplusplus wrote:
| The demographics driving up inflation are probably not the same
| ones investing into I-Bonds. Take a look at this loan
| delinquency rate over the course of the pandemic [1] - it's
| pretty clear that the American Rescue Plan (last round of
| stimulus passed by reconciliation) had a marked impact on
| subprime auto and credit card loans. That gives you a hint for
| where all that stimulus money ended up going instead of being
| spent on useful things like food or invested. Coincidentally
| one of the biggest drivers of CPI was used cars.
|
| [1]: https://www.wsj.com/articles/investors-turn-cautious-on-
| cons...
| arcticbull wrote:
| A lot was invested. [1]
|
| [1] https://fred.stlouisfed.org/series/PSAVERT
| readthenotes1 wrote:
| (a) most people in the USA live in a region without adequate
| mass transit and thus needs cars to do useful things like
| keeping a job or shopping at the grocery store.
|
| (B) did the Wall Street journal article also talk about the
| effects of the chip shortage and the subsequent new car
| shortage that hit last summer? If not, it is willfully
| misleading.
|
| (C) another hint on where all that money went is the increase
| in fuel costs, rent costs, and food costs. The increased
| demand is exacerbated by the supply chain troubles including
| the decrease in US oil wells provoked by Biden's war on
| American-sourced fossil fuels.
| cwmoreiras wrote:
| > spent on useful things like food or invested
|
| There are a lot of people for whom a used car is much more
| useful than bonds, shares of a company, etc.
| ethbr0 wrote:
| It's true. Try living without a car for a month in an
| average American city, and calculate the amount of time
| spent on transportation and movement.
| mywittyname wrote:
| This is one of the reasons certain economists recommend
| cash payments over benefits like SNAP for poor people.
| People generally have a good idea of how they could invest
| in themselves for an immediate improvement in their
| situation. Be that getting the money for a down payment on
| a car, house, or apartment; getting tools they need to
| start side business; taking time off to take a class at a
| community college; etc.
| jjoonathan wrote:
| Also, I saw an assumption about financial investment being
| a moral positive slip in there. I've become less convinced
| of this recently.
|
| At the bottom of an industrial, technological, geographic,
| or demographic S-curve, opportunities are plentiful to
| forego consumption today in order to create wealth
| tomorrow. Investment is useful. Rates of return are
| positive, incentivizing it. Cool. What happens at the top
| of the S-curve, though? Those opportunities dry up,
| relative to available capital. There's nothing inherently
| bad about this. Quite the opposite, it's a good thing! "Our
| work here is done." It's a big problem if you make your
| money by investing, though, and everyone at the top of the
| social pyramid does, so they exercise their immense
| political power (they're the top of the pyramid, remember)
| to ensure that the "growth" continues at all costs. It
| doesn't matter if it's artificial growth, it doesn't matter
| if it comes at greater expense to someone else, it doesn't
| matter if it causes social problems -- they keep pumping
| all the same because it is in their interest to do so, and
| they keep pumping until something bursts.
|
| In this framing, encouraging financial investment is _not_
| an unqualified moral positive. If financial rates of return
| are low, I 'd expect quite the opposite, with investment in
| financial instruments as a moral negative while investment
| in, say, better food or used cars would be net positives.
|
| Morality aside, I'd also expect this dynamic to be
| reflected in rates of return: if rich people can satisfy
| all of the market demand for financial investment, the best
| rates of return will be in non-financialized investments,
| like buying a new used car to replace an increasingly
| expensive clunker.
| zeroonetwothree wrote:
| The purchase limits of I Bonds means they can't possibly have
| any significant effect on markets.
| enlyth wrote:
| Is there a way to purchase these as a UK national?
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