Dude, you've been here long enough to understand real vs. nominal return.barrett wrote:The composite rate of return on new bonds is 0%, not .8%. Can someone explain to me why anyone would lend the government money for nothing in return? Safer than a bank? A mattress?dragoncar wrote: Why the sad face? .8% real is better than 0% real! I thought people were glad Ibonds couldn't go negative for just this reason.
New I Bond Rate - May 1, 2015
Moderator: Global Moderator
Re: New I Bond Rate - May 1, 2015
Re: New I Bond Rate - May 1, 2015
Right you are. I guess that mental leap to think of a 0% return actually being better than -.8% deflation was just a bit much for me. Forgive me. I have recovered. Have to learn to think like a Japanese or European investor.dragoncar wrote:Dude, you've been here long enough to understand real vs. nominal return.barrett wrote:The composite rate of return on new bonds is 0%, not .8%. Can someone explain to me why anyone would lend the government money for nothing in return? Safer than a bank? A mattress?dragoncar wrote: Why the sad face? .8% real is better than 0% real! I thought people were glad Ibonds couldn't go negative for just this reason.
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Re: New I Bond Rate - May 1, 2015
Looking at http://www.bls.gov/cpi/cpid1503.pdf, it seems like Sophie's right. Excluding food and energy, 1-year CPI is actually +1.8%.
…Which is still really low, but it's not negative.
…Which is still really low, but it's not negative.
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Re: New I Bond Rate - May 1, 2015
In case anyone is unaware of how I-Bond rates are calculated, this inflation rate is for the six months from September to March. Annualized, it's –1.60%. Even better real return at 0% nominal!Bean wrote: Fixed Rate = 0.00%
Inflation Rate = -0.80%
Composite rate = 0.00%
Re: New I Bond Rate - May 1, 2015
I suppose better than a money market fund that breaks the buck.