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Posted by anoop on January 14, 2008, 10:58 pm
Anyone know why the limit for I/EE bonds was
lowered from 30K/yr to 5K/yr? I was surprised to
find that out while reading the FAQ on Treasury Direct.
Anoop
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Posted by on January 15, 2008, 11:35 am
> Anyone know why the limit for I/EE bonds was
> lowered from 30K/yr to 5K/yr? I was surprised to
> find that out while reading the FAQ on Treasury Direct.
Did you read the announcement?
http://savingsbonds.gov/news/pressroom/pressroom_reducedpurchaselimit.htm
The reduction ... was made to refocus the savings bond
program on its original purpose of making these non-marketable
Treasury securities available to individuals with relatively
small sums to invest. Approximately 98 percent of all
annual purchases ... are for $5,000 or less.
That's why.
Whether it makes sense or not is a different question.
At current rates, most folks do better, at least in
the short- to mid- term, with CDs and high-interest
savings accounts.
Oh, and that $5000 limit applies separately to
EE and I series, and also separately to paper
versus paperless (online) purchases. So the
theoretical combined limit is now $20,000.
Thanks for pointing this out. I'd not noticed, since
with rates where they've been, I've not been paying
much attention to Treasury Savings Bonds. The
"real" rate on new I-bonds is still a pretty small 1.2%.
--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting
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Posted by jIM on January 17, 2008, 2:28 pm
>
> Oh, and that $5000 limit applies separately to
> EE and I series, and also separately to paper
> versus paperless (online) purchases. So the
> theoretical combined limit is now $20,000.
>
> Thanks for pointing this out. I'd not noticed, since
> with rates where they've been, I've not been paying
> much attention to Treasury Savings Bonds. The
> "real" rate on new I-bonds is still a pretty small 1.2%.
>
I asked this same question last night on another forum. I like this
answer better :)
Question- the real rate includes the inflation adjustment and the
interest rate, correct? I read that CPI was 4% to 6% higher in 2007-
does that 4% kick in anywhere? or does real return imply 1% above
CPI?
Second, can an I-bond ladder be made similar to a CD ladder?
I have a 90 day CD ladder with three $4000 CDs- each one maturing at a
30 day increment and rolling over to a new CD with interest rolled in.
I'd prefer an inflation indexed ladder, if the cost is right. I read
that costs and duration prohibit I-bonds from being used this way.
Can anyone elaborate.
The CDs represent 3 months cash for our household. I need liquidity
of a portion of the investment each month. Otherwise rollover to
another 90 day investment.
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Posted by Rich Carreiro on January 17, 2008, 8:10 pm
> Question- the real rate includes the inflation adjustment and the
> interest rate, correct? I read that CPI was 4% to 6% higher in 2007-
> does that 4% kick in anywhere? or does real return imply 1% above
> CPI?
No, the real rate is the rate above inflation. In other words,
if the real rate is 1.2%, then to first approximation, the interest
rate will be (inflation + 1.2%).
> Second, can an I-bond ladder be made similar to a CD ladder?
I suppose. However, I-bonds (like all savings bonds) cannot
be redeemed for one year. That's not "can be redeemed but
you pay a penalty", that's "cannot be redeemed for a year,
no matter how much you need the money." Plus, if they are
redeemed in the first five years, you lose three months'
interest.
> I have a 90 day CD ladder with three $4000 CDs- each one maturing at a
> 30 day increment and rolling over to a new CD with interest rolled in.
Do those CDs really pay more than a money-market mutual fund (not to
be confused with a bank's money market account)? With a MMMF, you
don't have to deal with all the rollover stuff, and can simply
write checks against the account when needed.
--
Rich Carreiro rlcarr@rlcarr.com
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Posted by jIM on January 18, 2008, 10:06 am
> > I have a 90 day CD ladder with three $4000 CDs- each one maturing at a
> > 30 day increment and rolling over to a new CD with interest rolled in.
>
> Do those CDs really pay more than a money-market mutual fund (not to
> be confused with a bank's money market account)? With a MMMF, you
> don't have to deal with all the rollover stuff, and can simply
> write checks against the account when needed.
>
Rich- good info. I received similar advice somewhere else, sounds
accurate to me.
I use the CDs to tie the money up. If it's in an account where we can
write checks, my wife might mistake a high expense for an emergency,
and that is not the point of an emergency fund. IMO anyway.
So I like the idea that CDs tie the money up. The difference between
2% and 4.5% interest on 12k is about $250 a year. Not ready to give
up peace of mind for $250.
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