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Re: New I Bond Rate - May 1, 2015
Posted: Fri May 01, 2015 7:46 pm
by dragoncar
barrett wrote:
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.
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?
Dude, you've been here long enough to understand real vs. nominal return.
Re: New I Bond Rate - May 1, 2015
Posted: Fri May 01, 2015 8:15 pm
by barrett
dragoncar wrote:
barrett wrote:
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.
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?
Dude, you've been here long enough to understand real vs. nominal return.
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.
Re: New I Bond Rate - May 1, 2015
Posted: Fri May 01, 2015 8:26 pm
by Pointedstick
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.
Re: New I Bond Rate - May 1, 2015
Posted: Sat May 02, 2015 2:11 pm
by Pet Hog
Bean wrote:
Fixed Rate = 0.00%
Inflation Rate =
-0.80%
Composite rate = 0.00%
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!
Re: New I Bond Rate - May 1, 2015
Posted: Sat May 02, 2015 4:39 pm
by ochotona
I suppose better than a money market fund that breaks the buck.