I bond rate November 2019

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sophie
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I bond rate November 2019

Post by sophie » Fri Nov 01, 2019 1:55 pm

The fixed rate is reduced to 0.2%, from the previous 0.5%.

The inflation rate is 2.02%, so new bonds would pay a total of 2.22%. The 0.5% variety will (eventually) pay 2.52%...nice!

If you haven't bought I bonds in 2019 I expect you aren't going to, since we all kinda knew the fixed rate would go down. But if you DID, then what do you plan to do in 2020? I expect I will wait and see what happens to treasury yields before the May 1 reset, but otherwise I'd still buy at this fixed rate.
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ochotona
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Re: I bond rate November 2019

Post by ochotona » Fri Nov 01, 2019 2:02 pm

sophie wrote:
Fri Nov 01, 2019 1:55 pm
The fixed rate is reduced to 0.2%, from the previous 0.5%.

The inflation rate is 2.02%, so new bonds would pay a total of 2.22%. The 0.5% variety will (eventually) pay 2.52%...nice!

If you haven't bought I bonds in 2019 I expect you aren't going to, since we all kinda knew the fixed rate would go down. But if you DID, then what do you plan to do in 2020? I expect I will wait and see what happens to treasury yields before the May 1 reset, but otherwise I'd still buy at this fixed rate.

If the Fed keeps cutting rates from here on into April 2020, I'd be a buyer of my full $10,000 before May 1, 2020.
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Re: I bond rate November 2019

Post by dualstow » Fri Nov 01, 2019 2:06 pm

sophie wrote:
Fri Nov 01, 2019 1:55 pm
The inflation rate is 2.02%, so new bonds would pay a total of 2.22%. The 0.5% variety will (eventually) pay 2.52%...nice!
Isn’t it 1.7%?
https://www.usinflationcalculator.com/i ... ion-rates/
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ochotona
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Re: I bond rate November 2019

Post by ochotona » Fri Nov 01, 2019 6:14 pm

Still thinking I may buy some EEs. Not many, I'm too old.
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jhogue
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Re: I bond rate November 2019

Post by jhogue » Mon Nov 04, 2019 1:04 pm

If the Treasury yield curve holds steady, I expect to buy my 2020 I bonds on 1 January or immediately thereafter. The sag in the middle of the yield curve has been warning of lower interest rates since Dec. 2018, so I see no compelling reason to wait for the May 1 2020 reset.

While the 11/01/19 reduction of the I-bond fixed component was widely anticipated, it was not reduced all the way to 0%. This was clearly a gift by Treasury to retail investors. The new combined I bond rate (2.22%) will beat every Treasury-issued security out to a 20 year Treasury note—even before taking 30 years of federal tax deferral and inflation adjustments into account.

For the present and near term future, I bonds still represent a free lunch courtesy of the US Treasury. They won’t make you rich, but they won’t make you sorry you bought them either.
“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: I bond rate November 2019

Post by ochotona » Sun Jan 05, 2020 5:19 pm

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sophie
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Re: I bond rate November 2019

Post by sophie » Mon Jan 06, 2020 8:47 am

Thanks ochotona, for the reminder that it's I Bond time!

I must say I did lose interest in this article after the author said to wait until April 10 to make a decision because "a lot can happen in 12 months". If he's that math-challenged I don't exactly want to be taking advice from him.

Based on the current values of 5 year nominal & TIPS bonds and the inflation rate creeping up only slightly since November, I would be extremely surprised if the I bond fixed rate went up in April, and October is looking doubtful as well.

So I'm inclined to buy at the end of this month, enjoy the solid interest rate and deferred tax, and not wait until April. What's everyone else doing?
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Re: I bond rate November 2019

Post by ochotona » Mon Jan 06, 2020 9:22 am

Wait until April
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Re: I bond rate November 2019

Post by jhogue » Mon Jan 06, 2020 9:56 am

I will be buying my annual allotment of I-bonds at the end of January and paper I-bonds with my 2019 tax return shortly after that.

The current I-bond yield is 2.22%, easily beating the 1 year T-bill (1.60%) and the 10 year note (1.78%). I see little or no prospect of higher fixed or variable rates on 1 April 2020.

Tipswatch usually gives excellent advice on buying I-bonds. Not this time.
“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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ochotona
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Re: I bond rate November 2019

Post by ochotona » Mon Jan 06, 2020 10:20 am

Since you put it that way, "The current I-bond yield is 2.22%," it's fine to go now
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Re: I bond rate November 2019

Post by Kbg » Mon Jan 06, 2020 9:07 pm

What strategies are folks using to decide (that aren't simply trying to predict the future) between normal Ts and I-bonds.
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Re: I bond rate November 2019

Post by boglerdude » Mon Jan 06, 2020 11:36 pm

iBonds are cash.
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