dualstow,dualstow wrote:No Pugsley,MangoMan wrote:Yes, but you must hold I-bonds for 5 years minimum or face a penalty. So a more realistic comparison would be to a 5-year CD.jhogue wrote:The current I bond rate is 1.96%. Max. $10,000 per SSN.
Yield of I bond currently beats money market funds, 4 year CD, and 5 year Treasury.
Less principal risk than FDIC - insured CDs or bank accounts.
In any case, if short term interest rates rise, 1.9% will not seem like a good deal 2 years from now.
As you can clearly see from the red text, you said nothing about a penalty (in red), and brazenly stated that you must hold I-bonds for 5 years in any case.
To be fair to MangoMan, I recognize that my comparison of the current I bond yield (1.96%) to the OP’s money market fund “great rate” (1.50%) was inexact. It had to be because I bonds are unique and don’t compare-- apples-to-apples-- to any other financial instrument. I wanted to demonstrate that you don’t need to abandon the safety of Treasury-backed securities just to stay competitive with yields for cash in the PP.
Short term rates have been crushed so low for so long that investors have grown schizophrenic about their cash. On the one hand, prudence has been displaced by yield chasing of the sort exhibited by the OP: Who cares about arcane stuff like credit risk, when I can get my hot little hands on an additional 0.22% by locking up my $35,000 for the next 12 months (net a whopping $77/year!!!) [compared to a 1 year Treasury bill @ 1.28% (7/9/17)].
On the other hand, legions of savers and investors have gone without meaningful returns for so long that they have simply thrown in the towel, thrown out their monthly statements, and let their TBTF mega-banks pretend that they did not hear that Janet Yellen has been raising interest rates. The article you cited on the front page of Thursday’s Wall Street Journal (“Bank Deposits Don’t Pay,” 7/13/17) is eye-opening evidence of just how extensively that despair has penetrated into our financial culture.