I bonds, the sequel

Financial Planning - Financial planning in general. (Moderated) 

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Subject Author Date I bonds, the sequel johnrichardson_us@yahoo.com 02-07-2007  Re: I bonds, the sequel zxcvbob 02-07-2007  Re: I bonds, the sequel jIM 02-08-2007  Re: I bonds, the sequel joetaxpayer 02-08-2007  Re: Savings bonds, the sequel P.Schuman 02-08-2007  Re: I bonds, the sequel kastnna 02-08-2007  Re: I bonds, the sequel zxcvbob 02-08-2007  Re: I bonds, the sequel Tad Borek 02-08-2007
Posted by johnrichardson_us@yahoo.com on February 7, 2007, 8:19 pm I clouded up my last question about ibonds with a lot of data. Here's another try: What do people think about holding ibonds as a "better cash"? Since they are held outside retirement accounts, they can do triple duty - for education (subject to income restrictions), as a retirement fallback, and as part of an emergency fund. But are there better alternatives? Posted by zxcvbob on February 7, 2007, 10:57 pm johnrichardson_us@yahoo.com wrote: > I clouded up my last question about ibonds with a lot of data. Here's > another try: > > What do people think about holding ibonds as a "better cash"? > > Since they are held outside retirement accounts, they can do triple > duty - for education (subject to income restrictions), as a retirement > fallback, and as part of an emergency fund. But are there better > alternatives? > I have some I-bonds that I bought in 2000, back when they were paying decent interest. Their current rate is 6.76%, which is not bad. But I bought a few I-bonds in 2003 and they are only earning 2.61% right now. I don't know what the current rate is, but it's not very good. I think it just went up from 1% over inflation to 1.5% over, but they adjusted the inflation rate way down. The inflation hedge *seems* like a good idea, but the government fudges the inflation calculations to understate the actual rate of inflation. (they "cook the books") So you are probably better off with EE bonds, which I think pay 4%. (still not all that great) The one great thing about I and EE bonds is they can be used for educational expenses and the interest becomes tax free -- subject to restrictions of course. The other good thing about I and EE bonds is the interest is exempt from state taxes. If you can handle the $1000 increments, T-bills are a better deal. The maturities are much shorter, and the interest rates are much higher -- currently about 5%. And the interest is still exempt from state taxes. You can buy them direct from the treasury and pay no commissions. If you can't swing $1000 at a pop for T-bills, bank CD's are also paying about 5% for 6 to 12 month notes. Money market rates should be competitive also, but I don't know that for certain. Best regards, Bob Posted by jIM on February 8, 2007, 9:32 am > johnrichardson...@yahoo.com wrote: > > I clouded up my last question about ibonds with a lot of data. Here's > > another try: > > > What do people think about holding ibonds as a "better cash"? > > > Since they are held outside retirement accounts, they can do triple > > duty - for education (subject to income restrictions), as a retirement > > fallback, and as part of an emergency fund. But are there better > > alternatives? > > I have some I-bonds that I bought in 2000, back when they were paying > decent interest. Their current rate is 6.76%, which is not bad. But I > bought a few I-bonds in 2003 and they are only earning 2.61% right now. > I don't know what the current rate is, but it's not very good. I > think it just went up from 1% over inflation to 1.5% over, but they > adjusted the inflation rate way down. > > The inflation hedge *seems* like a good idea, but the government fudges > the inflation calculations to understate the actual rate of inflation. > (they "cook the books") So you are probably better off with EE bonds, > which I think pay 4%. (still not all that great) The one great thing > about I and EE bonds is they can be used for educational expenses and > the interest becomes tax free -- subject to restrictions of course. The > other good thing about I and EE bonds is the interest is exempt from > state taxes. > > If you can handle the $1000 increments, T-bills are a better deal. The > maturities are much shorter, and the interest rates are much higher -- > currently about 5%. And the interest is still exempt from state taxes. > You can buy them direct from the treasury and pay no commissions. > > If you can't swing $1000 at a pop for T-bills, bank CD's are also paying > about 5% for 6 to 12 month notes. Money market rates should be > competitive also, but I don't know that for certain. > > Best regards, > Bob Could someone explain what an EE bond is? I-bonds are indexed to inflation (and issued by US government), correct? T-Bills are treasuries (issued by US government), correct? EE I have seen in fund prospectus, but have not seen an explanation, anyone which could comment, please feel free. Posted by joetaxpayer on February 8, 2007, 10:05 am jIM wrote: > Could someone explain what an EE bond is? > > I-bonds are indexed to inflation (and issued by US government), > correct? > T-Bills are treasuries (issued by US government), correct? > EE I have seen in fund prospectus, but have not seen an explanation, > anyone which could comment, please feel free. see http://www.savingsbonds.gov But I like to think of the EE bond as a way for the cheap relatives to give a gift that says $100, but it only cost $50. The recipient then has to not lose the physical piece of paper for the next nearly two decades, at which point it will cost more in gas (to go cash it in) than half the interest on the bond. For the individual, the 'nice' thing is the minimum purchase is $50 face value, so only $25 cost. JOE Posted by P.Schuman on February 8, 2007, 10:23 am > > > jIM wrote: > > Could someone explain what an EE bond is? > > > > I-bonds are indexed to inflation (and issued by US government), > > correct? > > T-Bills are treasuries (issued by US government), correct? > > EE I have seen in fund prospectus, but have not seen an explanation, > > anyone which could comment, please feel free. > > see http://www.savingsbonds.gov > > But I like to think of the EE bond as a way for the cheap relatives to > give a gift that says $100, but it only cost $50. The recipient then has > to not lose the physical piece of paper for the next nearly two decades, > at which point it will cost more in gas (to go cash it in) than half the > interest on the bond. > > For the individual, the 'nice' thing is the minimum purchase is $50 face > value, so only $25 cost. > JOE > I still have some $5000 HH bonds that pay $200/yr direct deposit. they also have a software app for tracking your bonds. http://www.treasurydirect.gov/indiv/tools/tools_savingsbondwizard_download.htm Similar Threads Posted Why bonds? March 16, 2007, 8:40 am EE Bonds November 6, 2007, 8:50 pm Bonds February 28, 2008, 9:25 am Bonds vs CDs November 3, 2008, 8:52 pm Understanding Bonds September 25, 2006, 4:59 am Re: Zero Coupon Bonds September 26, 2006, 4:46 pm I bonds, the ugly March 12, 2007, 12:27 pm us bonds and inflation May 21, 2007, 10:28 am Treasury Bonds & AMT October 29, 2007, 9:13 pm savings bonds - EE vs I - July 18, 2008, 1:44 pm