Gyroscopic Investing

After reading TIPSwatch's reliably excellent analysis (link below) on where the fixed rate is going to land on May 2023 I-Bonds, I'm a very strong lean to a May purchase. I buy for the long haul, a fixed rate hike seems very likely based on past trends, and the article shows the break even point anywhere from 4.5 to 9 years based on the author's guess at a fixed rate rising from its current .4 to a range of .6 to .8 in May.

While there's always the option of going half measures and splitting between April and May, I may as well go all-in and wait for the inflection point (and then cash out in 30 years, of course). So... what is the fallacy in my reasoning? Always enjoy the collective wisdom held here on this forum.

https://tipswatch.com/2023/04/14/i-bond ... uy-at-all/

Only hundreds of dollars at stake IIRC. I prefer the feeling of sitting in the optionality of cash (4.6% vmfxx) and gambling on a big fixed rate increase in November.

I buy I-Bonds every January. That way I don't have to obsess over stuff like this.

If I'd chosen to hold off in order to get the fixed rate increase, I'd probably stick with that decision and buy in May. There's no reliable prediction for what fixed rates will do in November, for all we know it may even be reduced. One thing to keep in mind is that the government has a lot of incentive to keep the fixed rate low, and no incentive whatsoever to increase it.

The key to I Bonds is to build up your stash of them so that you get a big boost every time there's an inflation spike. A small difference in return for $10K isn't going to matter much in the long run.

You can make some money in the short term buying and selling I-bonds.

However, I agree with sophie that the most profitable I-bond strategy is to buy as much as you can as soon as you can and hold them for as long as you can. That takes maximum advantage of their 30 year federal tax deferral+ 30 years SALT tax exemption + 30 years interest compounding at 6 month intervals.

Recent events also underline why I prefer I-bonds over bank CDs.