Highest I bond rate ever: 7.12%

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jhogue
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Highest I bond rate ever: 7.12%

Post by jhogue » Wed Oct 13, 2021 12:16 pm

Tipswatch has announced that the new variable component of I-bonds will reset to a whopping 7.12% on November 1, 2021. This is the highest interest rate ever recorded since I bonds were created in 1998.

Given this high rate, it seems unlikely that the Treasury will announce a fixed component rate above 0.00% on November 1. But whether you buy I bonds before or after November 1, the new variable rate ensures you will easily beat any Treasury bond or any FDIC-insured CD now available.

Those investors who have been accumulating a ladder of I-bonds will be well-rewarded for following a careful and patient strategy for risk-free fixed income.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Highest I bond rate ever: 7.12%

Post by Kbg » Thu Oct 14, 2021 8:51 am

Ugg, salt in the wound.

We had a slug of these and used them to by down our mortgage and refinance to a 15 year. Given the mortgage is 2.25% and my home has tripled in value, no complaints. However, we humans are never happy are we? :-)
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jhogue
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Re: Highest I bond rate ever: 7.12%

Post by jhogue » Thu Oct 14, 2021 9:40 am

Much as I like I-bonds, I like the freedom that comes with being debt free even more. I don't think I would be accumulating I-bonds if I had not paid off my mortgage already.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
Kbg
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Re: Highest I bond rate ever: 7.12%

Post by Kbg » Thu Oct 14, 2021 9:54 am

jhogue wrote:
Thu Oct 14, 2021 9:40 am
Much as I like I-bonds, I like the freedom that comes with being debt free even more. I don't think I would be accumulating I-bonds if I had not paid off my mortgage already.
I debate myself over this all the time. The purely economic rational thing to do is go with interest rate differentials, but then everything important in life isn't economic.
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sophie
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Re: Highest I bond rate ever: 7.12%

Post by sophie » Thu Oct 14, 2021 12:05 pm

I am absolutely incredulous that banks and T bills are still paying near zero interest. A spread of 7% between inflation and nominal interest rates is absolutely unprecedented.

I don't know what it might imply about monetary stability, but it's for sure not good. This kind of situation is what should make gold take off like a rocket. Gold can sometimes take time (e.g. months) to react, so I guess we'll have to wait and see.
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Re: Highest I bond rate ever: 7.12%

Post by Kbg » Thu Oct 14, 2021 2:02 pm

sophie wrote:
Thu Oct 14, 2021 12:05 pm
I am absolutely incredulous that banks and T bills are still paying near zero interest. A spread of 7% between inflation and nominal interest rates is absolutely unprecedented.
There's no incentive for them to do so and a lot of things are tied to various base rates.

On the flip side, one could ask the same about mortgages and other secured loans which are also dirt cheap.

The above tells you what is being incentivized (debt over savings).
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Re: Highest I bond rate ever: 7.12%

Post by pp4me » Fri Oct 15, 2021 12:13 pm

Gee, I'm going to have to open a TD account and start moving the money I have in STIP there. Already did that for my wife but they tell me there
is already an account with my SS (I had one a long time but it's closed). Hard to believe someone else would use your SS to open up a TD account
but I guess you never know.

Unfortunately, they didn't give me a customer service number to call but let me send an message. Wonder if I will ever hear back from them.
With those rates they may be busy.
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