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

Discussion of the Cash portion of the Permanent Portfolio

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

Post by jhogue » Wed Apr 17, 2019 8:59 am

Yup.

With the 1 year T bill currently at 2.43%, I bonds purchased after May 1 do not look appealing.
“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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Kbg
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Re: New I Bond Rate 11/1/18 to 4/30/18

Post by Kbg » Thu Apr 18, 2019 11:25 pm

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

Post by jhogue » Mon Apr 22, 2019 10:22 am

Kbg,

Can you explain your interest in corporates and munis? I think there is more than ratings risk involved in them.
“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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Kbg
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Re: New I Bond Rate 11/1/18 to 4/30/18

Post by Kbg » Mon Apr 22, 2019 10:03 pm

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.
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