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Re: New I Bond Rate 11/1/18 to 4/30/18

Posted: Wed Apr 17, 2019 8:59 am
by jhogue
Yup.

With the 1 year T bill currently at 2.43%, I bonds purchased after May 1 do not look appealing.

Re: New I Bond Rate 11/1/18 to 4/30/18

Posted: Thu Apr 18, 2019 11:25 pm
by Kbg
Of course this is all individual tax rate dependent but for my federal and state tax rates I get the following return order after taxes.

I-Bonds
ST Investment Grade Corporate
ST US Govt
ST Munis

Assumes 2.83 on I-bonds and tonight's 30 day SEC yields on VCSH, VGSH, VWSTX, as adjusted for various tax treatments

Now of course we can defer I-bond interest tax for a VERY long time...but I'll let someone else do the time value of money calcs.

What I really learned this evening is that perhaps folks should take on some rating risk.

Re: New I Bond Rate 11/1/18 to 4/30/18

Posted: Mon Apr 22, 2019 10:22 am
by jhogue
Kbg,

Can you explain your interest in corporates and munis? I think there is more than ratings risk involved in them.

Re: New I Bond Rate 11/1/18 to 4/30/18

Posted: Mon Apr 22, 2019 10:03 pm
by Kbg
Well they are major bond classes so I monitor them. Generally munis only work well for certain tax situations and I rarely invest in them. I’m a fan of investment grade ST corporates however. I’ve held VCSH for a very long time. A little more risk, yep. A huge risk jump over STTs, nope. Compare the CAGR of vcsh vs vgsh for the past 5 years. Individuals will have to determine if the risk reward is for them.