.55% 3 Year Rates - More I-bonds? And maybe some EE's?
Posted: Mon Aug 01, 2011 5:11 pm
The recent debt-limit fiasco has sent the yield curve a-twisting a bit. Short-rates are up and long-rates are down, but apparently 1-3 years are part of the "long" in terms of the direction their heading. Instead of .3%-1% for 1-3 year treasuries, respectively, we're now looking at .16%-.55%.
If you've been using SHY as cash for money you won't need to get to right away, I think it's time to try to i-bonds or maybe EE bonds... not that we haven't discussed them already.
With I bonds yielding what looks like will be about 3.2-3.6% in your first year, with a minimum of 2.3% guaranteed, it's the obvious steal.
Even EE bonds, though, will hold their principal plus give you a guaranteed 1.1% every year.
With even 5-years at 1.32%, these i/ee bonds are a real steal if you can part with your cash for a year. At .55% on a 3-year bond, SHY could actually easily deliver some negative returns if/when rates rise. If rates DON'T rise, you'll still be handily beating it, tax-deferred, at 1.1% with your EE bonds, and your i-bonds will continue to track CPI.
Your SHY has served you well, but if there's ever been a time to shoot for some i-bonds, now is it... and if you max those out... maybe some EE's wouldn't be so bad either.
If you've been using SHY as cash for money you won't need to get to right away, I think it's time to try to i-bonds or maybe EE bonds... not that we haven't discussed them already.
With I bonds yielding what looks like will be about 3.2-3.6% in your first year, with a minimum of 2.3% guaranteed, it's the obvious steal.
Even EE bonds, though, will hold their principal plus give you a guaranteed 1.1% every year.
With even 5-years at 1.32%, these i/ee bonds are a real steal if you can part with your cash for a year. At .55% on a 3-year bond, SHY could actually easily deliver some negative returns if/when rates rise. If rates DON'T rise, you'll still be handily beating it, tax-deferred, at 1.1% with your EE bonds, and your i-bonds will continue to track CPI.
Your SHY has served you well, but if there's ever been a time to shoot for some i-bonds, now is it... and if you max those out... maybe some EE's wouldn't be so bad either.