Inflation - What are you doing different

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jhogue
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Re: Inflation - What are you doing different

Post by jhogue » Thu May 12, 2022 10:13 pm

@ barrett:
I understand your desire to keep things as simple as possible.

I won't make a decision on when to deliver 2022 gifted I bonds until after the November 1, 2022 interest rate re-set. The option to choose when to deliver gifted I-bonds is an attractive feature, but sooner is usually better than later.
“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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Re: Inflation - What are you doing different

Post by barrett » Fri May 13, 2022 6:54 am

jhogue wrote:
Thu May 12, 2022 10:13 pm
@ barrett:
I understand your desire to keep things as simple as possible.

I won't make a decision on when to deliver 2022 gifted I bonds until after the November 1, 2022 interest rate re-set. The option to choose when to deliver gifted I-bonds is an attractive feature, but sooner is usually better than later.
jhogue, Are you saying that if the CPI-U numbers are still high from April to September (i.e. a continued high inflation rate on bonds starting 11/1/22) that you will buy another $20,000 in early 2023 and push off delivering/receiving $20,000 in bonds to 2024 or later? Or something close to that?
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Re: Inflation - What are you doing different

Post by vnatale » Fri May 13, 2022 7:56 am

vnatale wrote:
Thu May 12, 2022 6:16 am

jhogue wrote:
Wed May 11, 2022 11:53 pm

Gifting I-bonds is a strategy to buy more than the $10K per person limit by buying I-bonds as gifts.


Not directly related to this discussion but DEFINITELY related to iBonds....

On my 2019 tax return I directed $5,000 of my refund to go towards purchasing iBonds. Instead, I later received a $5,000 refund from the IRS.

On my 2020 tax return I directed $5,000 of my refund to go towards purchasing iBonds. I had noted where I'd not done all properly regarding the preparation of my 2019 return and corrected that on this 2020 tax return. Many, many, many months later after filing that return I received paper iBonds in the mail.

On my 2021 tax return I directed $5,000 of my refund to go towards purchasing iBonds. I had completed the return for 2021 the same as I had for 2020 regarding iBonds. To my dismay the IRS again last week sent me a $5,000 refund. I assume I have no further recourse regarding this?

Thinking about it further the only differences in filing the returns and the commonalities with the unsuccessful attempted purchases of the iBonds were that the successful 2020 was paper filed while the 2019 and 2021 returns were e-filed.


I have yet to see any response to this.

Though iBonds are wonderful they are of limited wonderfulness.

With the annual limitations that how much a single person can buy they represent only a tiny portion of a portfolio of a material size. And, it's made even worse when things like the above happen, effectively reducing one's annual limit by a full 33%.

Is there any other investment wherein you are limited to how much you can invest in it per year?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Inflation - What are you doing different

Post by jhogue » Fri May 13, 2022 8:15 am

@ barrett:
My tentative plan is to deliver $10 K each in 2023 and $10K in 2024 from my gift box. However, I retain the option to push those deliveries into 2024+ 2025 if I think inflation measured by CPI-U will drop significantly. I probably won't do that, but it is always nice to have options.
“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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Re: Inflation - What are you doing different

Post by jhogue » Fri May 13, 2022 9:09 am

@ Vinny:

I-bonds are not magic.

In the immortal words of Medium Tex, they are simply "the best looking horse at the glue factory!"
“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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Re: Inflation - What are you doing different

Post by Dieter » Fri May 13, 2022 9:33 am

“Tiny portion of a portfolio of material size”

How do you define a portion of material size?

Over what investing horizon?

Yeah, if given a lump sum of $10M

But if investing over time, $10k/year == $100k + interest, so after 10 years == 10% of a $1m portfolio

Have a spouse, can get to 20% of that in 10 years

Or 10% of $2m; 40% of the cash portion of the PP

But, yeah, once over $4m, gets to 5% or less

Limit should be indexed to inflation
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Re: Inflation - What are you doing different

Post by dualstow » Fri May 13, 2022 10:12 am

Dieter wrote:
Fri May 13, 2022 9:33 am
“Tiny portion of a portfolio of material size”

How do you define a portion of material size?

Over what investing horizon?
I’d like to know, too. Material size = what

[vinny] Is there any other investment wherein you are limited to how much you can invest in it per year?[/vinny]
My wife put a cap on my plaid shirts, but that probably doesn’t count.
let 2022 be the year of GOLD
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Re: Inflation - What are you doing different

Post by jhogue » Fri May 13, 2022 12:51 pm

[vinny] Is there any other investment wherein you are limited to how much you can invest in it per year?[/vinny]
The following type of accounts have annual limits:
Traditional IRA, Roth IRA, SEP IRA, 401k, 403b, 457b. The FDIC also has limits coverage of individual accounts and CD purchases.

Warren Buffet has not to my knowledge revealed whether or not he holds I-bonds. If he does, they are certainly a minuscule portion of his investment portfolio.
“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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Re: Inflation - What are you doing different

Post by vnatale » Fri May 13, 2022 9:30 pm

Dieter wrote:
Fri May 13, 2022 9:33 am

“Tiny portion of a portfolio of material size”

How do you define a portion of material size?

Over what investing horizon?

Yeah, if given a lump sum of $10M

But if investing over time, $10k/year == $100k + interest, so after 10 years == 10% of a $1m portfolio

Have a spouse, can get to 20% of that in 10 years

Or 10% of $2m; 40% of the cash portion of the PP

But, yeah, once over $4m, gets to 5% or less

Limit should be indexed to inflation


If the $1,000,000 investment was static throughout those 10 years then it'd only be an average of 5% of the portfolio.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Inflation - What are you doing different

Post by vnatale » Fri May 13, 2022 9:33 pm

jhogue wrote:
Fri May 13, 2022 12:51 pm

[vinny] Is there any other investment wherein you are limited to how much you can invest in it per year?[/vinny]
The following type of accounts have annual limits:
Traditional IRA, Roth IRA, SEP IRA, 401k, 403b, 457b. The FDIC also has limits coverage of individual accounts and CD purchases.

Warren Buffet has not to my knowledge revealed whether or not he holds I-bonds. If he does, they are certainly a minuscule portion of his investment portfolio.


All those retirement vehicles are just that. Retirement vehicles. All the investments you make in them can me make outside of retirement vehicles and, therefore, unlimited.

The FDIC limits coverages are not a comparison.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Inflation - What are you doing different

Post by jhogue » Sat May 14, 2022 9:40 am

vnatale wrote:
Fri May 13, 2022 9:33 pm
jhogue wrote:
Fri May 13, 2022 12:51 pm
[vinny] Is there any other investment wherein you are limited to how much you can invest in it per year?[/vinny]
The following type of accounts have annual limits:
Traditional IRA, Roth IRA, SEP IRA, 401k, 403b, 457b. The FDIC also has limits coverage of individual accounts and CD purchases.

Warren Buffet has not to my knowledge revealed whether or not he holds I-bonds. If he does, they are certainly a minuscule portion of his investment portfolio.
All those retirement vehicles are just that. Retirement vehicles. All the investments you make in them can me make outside of retirement vehicles and, therefore, unlimited.

The FDIC limits coverages are not a comparison.
Vinny,
1. What you wrote is simply not true. One example will suffice: The 457b account that I once held was constructed by its parent company, Prudential Insurance, to include a stable value fund composed of short term insurance contracts drawn from Prudential's own extensive pool of such contracts. This stable value fund was exclusively available to 457b account holders whose employers had investment plans with Prudential.

2. When are you going to address Dieter and dualstow's questions?
“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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Re: Inflation - What are you doing different

Post by vnatale » Sat May 14, 2022 8:17 pm

jhogue wrote:
Sat May 14, 2022 9:40 am

vnatale wrote:
Fri May 13, 2022 9:33 pm

jhogue wrote:
Fri May 13, 2022 12:51 pm

[vinny] Is there any other investment wherein you are limited to how much you can invest in it per year?[/vinny]
The following type of accounts have annual limits:
Traditional IRA, Roth IRA, SEP IRA, 401k, 403b, 457b. The FDIC also has limits coverage of individual accounts and CD purchases.

Warren Buffet has not to my knowledge revealed whether or not he holds I-bonds. If he does, they are certainly a minuscule portion of his investment portfolio.


All those retirement vehicles are just that. Retirement vehicles. All the investments you make in them can me make outside of retirement vehicles and, therefore, unlimited.

The FDIC limits coverages are not a comparison.


Vinny,
1. What you wrote is simply not true. One example will suffice: The 457b account that I once held was constructed by its parent company, Prudential Insurance, to include a stable value fund composed of short term insurance contracts drawn from Prudential's own extensive pool of such contracts. This stable value fund was exclusively available to 457b account holders whose employers had investment plans with Prudential.

2. When are you going to address Dieter and dualstow's questions?


1. I should further refine my statement. What other investment that is eligible to be purchased by any American has annual investment amount limitations?

We are mostly Americans here. We discuss iBonds and other investments that any of us can buy. Is there another one wherein there is an annual limit to which each of us can buy (as a single person)?

What is a material amount?

Assume someone who has newly discovered iBonds at the age of 60 already has a $500,000 portfolio. Putting aside the additional $5,000 in purchases one can do via a tax return refund and which seems to be total hit or miss then the annual limit is $10,000 (again, as single person).

After the first year's $10,000 purchase, iBonds would represent 2% of the portfolio. If the person did 9 more $10,000 amounts, the iBonds investment would be $100,000 by the age of 70.

If the person earned an average of 5% per year on the portfolio (not including the iBond investments) it would have grown to about $815,000 by age 70.

The average portfolio balance for that ten years would be about $650,000 while the average iBonds balance for that ten years would be $50,000. Therefore bonds would represent 7.6% of the total portfolio (actually less if I counted the iBond investment as part of the overall portfolio, which I did not). And, of course, if the portfolio was larger than $500,000 at the beginning, that percentage would be even lower.


Have I answered all questions?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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