2022 Nov iBonds: 0.4% fixed

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Dieter
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2022 Nov iBonds: 0.4% fixed

Post by Dieter » Thu Nov 03, 2022 9:53 pm

https://treasurydirect.gov/news/2022/re ... -02-rates/ -- Fiscal Service Announces New Savings Bonds Rates, Series I to Earn 6.89%, Series EE to Earn 2.10%

Sorry if I missed a prior post on this

First time in a couple of years that the fixed rate isn't 0%
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Re: 2022 Nov iBonds: 0.4% fixed

Post by boglerdude » Fri Nov 04, 2022 1:32 am

So it was a mistake to wait till November on ibonds? Dunno what this chart means, 12 years to come out ahead or something
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Re: 2022 Nov iBonds: 0.4% fixed

Post by jhogue » Fri Nov 04, 2022 10:09 am

With the expected passage of 1 Nov. re-set rate for I-bonds, the dust is beginning to settle:

1. For short-term I-bond investors, the variable interest component rate fell from 9.62% to 6.48%. for an annualized rate of 8.2%, if you bought before 1 Nov. This looks like a severe fall off until you consider that a comparable 1 year Treasury currently yields 4.8%. I-bonds still beat the pants off Treasurys and bank CDs. In fact, given a current expected rate of inflation of 5%, the FDIC should re-name CDs as "certificates of confiscation" because that is exactly what you are getting if you plunk down your Cash on them.

2. For long-term I-bond investors, Treasury’s decision to add a 0.4% fixed component to I-bonds purchased after 1 Nov. represents (for me, anyway) an unexpected gift. The fixed component rate make I-bonds more valuable the longer that you hold them because I-bonds are tax-deferred for 30 years and their interest compounds semi-annually. If you still hesitated about buying I-bonds you now have a risk-free opportunity to beat inflation. Deep Cash indeed!

3. Treasury did not cover itself with glory when confronted by a massive wave of investors who know a good deal when they see it. In retrospect, it seems dumb to have launched an update to the webpage in the midst of the run-up to the 1 Nov. re-set. Our Treasury Department can do better than this.
“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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Dieter
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Re: 2022 Nov iBonds: 0.4% fixed

Post by Dieter » Fri Nov 04, 2022 4:26 pm

jhogue wrote:
Fri Nov 04, 2022 10:09 am
With the expected passage of 1 Nov. re-set rate for I-bonds, the dust is beginning to settle:

<snip>
Thanks for the additional info!

I’m ready to buy more iBonds in January!
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Re: 2022 Nov iBonds: 0.4% fixed

Post by jhogue » Mon Nov 07, 2022 8:17 am

David Enna gives an extended consideration of how to time a sale of I-bonds to yield the optimal interest rate for the short-term investor.

See his column at: https://tipswatch.com

Note that,( like me), his preferred strategy is to always buy the max every year and never sell before 30 year maturity-- or when you need to convert Deep Cash into the green stuff.
“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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