I Bonds - for 2013

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FB01
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I Bonds - for 2013

Postby FB01 » Wed Oct 24, 2012 1:53 pm

Hi,

I am already done for 2012 I Bonds for me and my wife. Now, what is the experts opinion for 2013? As the rates are out which 1.76% for the 6 months, is it advisable to buy 20K I bonds at the end of January 2013 or wait for May rates to show up and buy 10K at that point of time meaning buy 10K in Jan and other half after May rates..

Suggestions??

FB

sport
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Re: I Bonds - for 2013

Postby sport » Wed Oct 24, 2012 2:02 pm

If you wait until late April, you will know what the May inflation rate will be and you will be in a better position to choose at that time.

Jeff

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Re: I Bonds - for 2013

Postby Grt2bOutdoors » Wed Oct 24, 2012 2:04 pm

jsl11 wrote:If you wait until late April, you will know what the May inflation rate will be and you will be in a better position to choose at that time.

Jeff


+1 Exactly what he said above.
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FB01
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Re: I Bonds - for 2013

Postby FB01 » Mon Nov 05, 2012 4:04 pm

Thanks..

I guess will wait till May for purchasing Ibonds for 2013 instead of buying in January

exoilman
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Re: I Bonds - for 2013

Postby exoilman » Mon Nov 05, 2012 4:11 pm

I never bought any. What's the best way?

thanks
Sam

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Re: I Bonds - for 2013

Postby dickenjb » Mon Nov 05, 2012 4:13 pm

exoilman wrote:I never bought any. What's the best way?

thanks
Sam


Only one way now - on Treasury Direct.

Oh you MAY be able to get some as an IRS refund if you deliberately get overwithheld.

But no buying them at banks anymore.

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Phineas J. Whoopee
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Re: I Bonds - for 2013

Postby Phineas J. Whoopee » Mon Nov 05, 2012 6:08 pm

FB01 wrote:Hi,

I am already done for 2012 I Bonds for me and my wife. Now, what is the experts opinion for 2013? As the rates are out which 1.76% for the 6 months, is it advisable to buy 20K I bonds at the end of January 2013 or wait for May rates to show up and buy 10K at that point of time meaning buy 10K in Jan and other half after May rates..

Suggestions??

FB

Hi FB,

My suggestion: If you already have the cash and, for the period of late January through late April, you can find a completely safe, liquid investment with no interest rate risk which earns well over 1.76% annualized, to take account of I Bond tax advantages, then wait.

The only other reason for waiting I can come up with of is if you think the fixed rate in May will exceed 0%.

If not you may as well start earning higher interest as soon as possible.

PJW

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Mel Lindauer
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Re: I Bonds - for 2013

Postby Mel Lindauer » Mon Nov 05, 2012 7:52 pm

Phineas J. Whoopee wrote:
FB01 wrote:Hi,

I am already done for 2012 I Bonds for me and my wife. Now, what is the experts opinion for 2013? As the rates are out which 1.76% for the 6 months, is it advisable to buy 20K I bonds at the end of January 2013 or wait for May rates to show up and buy 10K at that point of time meaning buy 10K in Jan and other half after May rates..

Suggestions??

FB

Hi FB,

My suggestion: If you already have the cash and, for the period of late January through late April, you can find a completely safe, liquid investment with no interest rate risk which earns well over 1.76% annualized, to take account of I Bond tax advantages, then wait.

The only other reason for waiting I can come up with of is if you think the fixed rate in May will exceed 0%.

If not you may as well start earning higher interest as soon as possible.

PJW


Yep, and you'll be that much closer to being able to redeem them if something better comes along (I Bonds are dead money for one year).
Best Regards - Mel | | Semper Fi

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Re: I Bonds - for 2013

Postby beardsworth » Mon Nov 05, 2012 8:21 pm

Mel Lindauer wrote:I Bonds are dead money for one year.


Although "dead money" is not the Treasury's own preferred terminology. :moneybag

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Mel Lindauer
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Re: I Bonds - for 2013

Postby Mel Lindauer » Mon Nov 05, 2012 8:40 pm

MarcMyWord wrote:
Mel Lindauer wrote:I Bonds are dead money for one year.


Although "dead money" is not the Treasury's own preferred terminology. :moneybag


True. They simply say that I Bonds can't be redeemed for the first year. I use fewer words to say the same thing ("dead money").
Best Regards - Mel | | Semper Fi

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Phineas J. Whoopee
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Re: I Bonds - for 2013

Postby Phineas J. Whoopee » Mon Nov 05, 2012 9:04 pm

Mel Lindauer wrote:
MarcMyWord wrote:
Mel Lindauer wrote:I Bonds are dead money for one year.


Although "dead money" is not the Treasury's own preferred terminology. :moneybag


True. They simply say that I Bonds can't be redeemed for the first year. I use fewer words to say the same thing ("dead money").


They can for those so fortunate as to live in federally-declared disaster areas! 20,000,000 of us should know!

PJW

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Mel Lindauer
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Re: I Bonds - for 2013

Postby Mel Lindauer » Mon Nov 05, 2012 9:37 pm

Phineas J. Whoopee wrote:
Mel Lindauer wrote:
MarcMyWord wrote:
Mel Lindauer wrote:I Bonds are dead money for one year.


Although "dead money" is not the Treasury's own preferred terminology. :moneybag


True. They simply say that I Bonds can't be redeemed for the first year. I use fewer words to say the same thing ("dead money").


They can for those so fortunate as to live in federally-declared disaster areas! 20,000,000 of us should know!

PJW


That's true, but I wouldn't call it "fortunate" by any means.
Best Regards - Mel | | Semper Fi

FB01
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Re: I Bonds - for 2013

Postby FB01 » Tue Nov 06, 2012 1:32 pm

Mel Lindauer wrote:
Phineas J. Whoopee wrote:
Mel Lindauer wrote:
MarcMyWord wrote:
Mel Lindauer wrote:I Bonds are dead money for one year.


Although "dead money" is not the Treasury's own preferred terminology. :moneybag


True. They simply say that I Bonds can't be redeemed for the first year. I use fewer words to say the same thing ("dead money").


They can for those so fortunate as to live in federally-declared disaster areas! 20,000,000 of us should know!

PJW


That's true, but I wouldn't call it "fortunate" by any means.



Mel,

Do you also recommend to grab I Bonds in January end for 2013 or wait till May? What are your view?

FB

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Kevin M
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Re: I Bonds - for 2013

Postby Kevin M » Tue Nov 06, 2012 2:51 pm

I think I'll buy in January. Since I'm betting that the fixed rate will remain at 0% for the year, I haven't seen a good argument to wait, considering the other alternatives in this low-rate environment.

Kevin
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Re: I Bonds - for 2013

Postby tfb » Tue Nov 06, 2012 5:13 pm

Kevin M wrote:I think I'll buy in January. Since I'm betting that the fixed rate will remain at 0% for the year, I haven't seen a good argument to wait, considering the other alternatives in this low-rate environment.

Me too.
Harry Sit, taking a break from the forums.

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Mel Lindauer
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Re: I Bonds - for 2013

Postby Mel Lindauer » Tue Nov 06, 2012 6:01 pm

FB01 wrote:Mel,

Do you also recommend to grab I Bonds in January end for 2013 or wait till May? What are your view?

FB


I agree with the two posters above who say they're going to buy in Jan. I just don't see the fixed rate changing, and you'll get the known 1.76% inflation adjustment for the first six months and the next inflation adjustment announcement after that. The only reason to wait is if you expect the fixed rate to be greater than 0%/ While my crystal ball is a bit cloudy, I simply don't see that happening in May.
Best Regards - Mel | | Semper Fi

FB01
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Re: I Bonds - for 2013

Postby FB01 » Tue Nov 06, 2012 6:21 pm

Mel Lindauer wrote:
FB01 wrote:Mel,

Do you also recommend to grab I Bonds in January end for 2013 or wait till May? What are your view?

FB


I agree with the two posters above who say they're going to buy in Jan. I just don't see the fixed rate changing, and you'll get the known 1.76% inflation adjustment for the first six months and the next inflation adjustment announcement after that. The only reason to wait is if you expect the fixed rate to be greater than 0%/ While my crystal ball is a bit cloudy, I simply don't see that happening in May.



Thank you Mel...

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Daffy
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Re: I Bonds - for 2013

Postby Daffy » Wed Nov 07, 2012 3:33 pm

tfb wrote:
Kevin M wrote:I think I'll buy in January. Since I'm betting that the fixed rate will remain at 0% for the year, I haven't seen a good argument to wait, considering the other alternatives in this low-rate environment.

Me too.



Me three. It's better to move the money out of low paying savings and start the 12-month holding period as soon as possible in case come next January something better comes around (minus the three month penalty). I'm buying in late January.

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Re: I Bonds - for 2013

Postby JimInIllinois » Tue Jan 01, 2013 11:25 pm

According to http://www.savings-bond-advisor.com/cpi-inflation-update/ the November CPI-U is down .51% from September. If this trend holds and the next I-bond inflation adjustment is zero, then bonds purchased in January would have a return for the first year of 0.88%. Is that low enough that people are willing to wait until the CPI comes out in April to decide? How low would the new rate need to be for you to wait until November to buy?

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Re: I Bonds - for 2013

Postby #Cruncher » Wed Jan 02, 2013 3:01 pm

JimInIllinois wrote:...the November CPI-U is down .51% from September. If this trend holds and the next I-bond inflation adjustment is zero ...
Not sure what you mean, Jim. If the trend were to hold, the next inflation rate would be negative, not zero. I guess you mean that the composite rate for I Bonds with a 0% fixed rate would be zero.

But based on the CPI-U history (1) since I Bonds were first issued, it's unlikely that the trend will hold:

Code: Select all

Year     Sep       Nov      Mar (2)  Nov vs Sep  Mar vs Nov  Mar vs Sep
----   -------   -------   -------   ----------  ----------  ----------
1998   163.600   164.000   165.000      0.24%       0.61%       0.86%
1999   167.900   168.300   171.100      0.24%       1.66%       1.91%
2000   173.700   174.100   176.200      0.23%       1.21%       1.44%
2001   178.300   177.400   178.800     (0.50%)      0.79%       0.28%
2002   181.000   181.300   184.200      0.17%       1.60%       1.77%
2003   185.200   184.500   187.400     (0.38%)      1.57%       1.19%
2004   189.900   191.000   193.300      0.58%       1.20%       1.79%
2005   198.800   197.600   199.800     (0.60%)      1.11%       0.50%
2006   202.900   201.500   205.352     (0.69%)      1.91%       1.21%
2007   208.490   210.177   213.528      0.81%       1.59%       2.42%
2008   218.783   212.425   212.709     (2.91%)      0.13%      (2.78%)
2009   215.969   216.330   217.631      0.17%       0.60%       0.77%
2010   218.439   218.803   223.467      0.17%       2.13%       2.30%
2011   226.889   226.230   229.392     (0.29%)      1.40%       1.10%
2012   231.407   230.221               (0.51%) (3)
                                     ----------  ----------  ----------
Simple Avg 1998 - 2011                 (0.20%)      1.25%       1.05%
Through March 2012 the four month change November to March has averaged positive 1.25% while that for September to November has averaged negative 0.20%. The CPI used for TIPS and I Bonds is not seasonally adjusted. This means there is no basis for assuming the change for a non-annual period will continue.

1) Source: Bureau of Labor Statistics CPI-U Since 1913
2) March of the following year
3) Omitted from average
Last edited by #Cruncher on Wed Jan 02, 2013 4:08 pm, edited 2 times in total.

2beachcombers
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Re: I Bonds - for 2013

Postby 2beachcombers » Wed Jan 02, 2013 3:57 pm

me 4--bought today

JimInIllinois
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Re: I Bonds - for 2013

Postby JimInIllinois » Wed Jan 02, 2013 7:39 pm

Thanks, #Cruncher. I'll wait to see the December CPI on January 16 but probably go ahead and buy in late January.

DesertGuy
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Re: I Bonds - for 2013

Postby DesertGuy » Wed Jan 02, 2013 10:35 pm

Bought ours today too. $20,000.

larmewar
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Re: I Bonds - for 2013

Postby larmewar » Thu Jan 03, 2013 8:59 pm

Buy in January, unless you will hold in risk free account that earns more than 1.76%. I-bonds fixed rate is normally lower than TIPS fixed rate, so no realistic chance of a non-zero fixed rate.

Lar

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Rainier
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Re: I Bonds - for 2013

Postby Rainier » Thu Jan 03, 2013 9:53 pm

Seems silly to wait until may. Also, seems silly to buy now versus last week in January.
- Bill


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