I Bonds 5.27% interest
I Bonds 5.27% interest
I was checking the rate on I Bonds issued in September 1998. It is a whopping 5.27%! I believe that is when they were first issued.
That seems incredible to think of the compounded value of $10,000 today. How many folks have the September 1998 bonds and are you still buying them at the current rates?
$20,880!
Correct me if I'm wrong...but if I compound $10,000 for 14 years at 5.27%...
(I'm new to I Bonds so I'm in the learning phase)
That seems incredible to think of the compounded value of $10,000 today. How many folks have the September 1998 bonds and are you still buying them at the current rates?
$20,880!
Correct me if I'm wrong...but if I compound $10,000 for 14 years at 5.27%...
(I'm new to I Bonds so I'm in the learning phase)
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Re: I Bonds 5.27% interest
Your interest rate will vary depending on the inflation. Right now these bonds are paying 3.4% real rate together with an inflation rate of 1.87%.
3.4 + 1.87 = 5.27%
The inflation rate will change every 6 months so your total interest rate will change too.
I have some I Bonds purchased in May of 2000 that are paying that same rate. I also have some purchased in December of 2000 that are paying 5.47% currently.
Next November 1st is the next rate adjustment date so stay tuned.
3.4 + 1.87 = 5.27%
The inflation rate will change every 6 months so your total interest rate will change too.
I have some I Bonds purchased in May of 2000 that are paying that same rate. I also have some purchased in December of 2000 that are paying 5.47% currently.
Next November 1st is the next rate adjustment date so stay tuned.
Last edited by jeff1949 on Sat Jun 21, 2014 7:24 pm, edited 1 time in total.
Re: I Bonds 5.27% interest
That table is exactly what I was looking for, where did you find it?Tier1Capital wrote:http://eyebonds.info/ibonds/home10000.html
Perfect example of staying the course on a conservative investment. Wish I had known about it earlier.
I see I undervalued that IBond!
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Re: I Bonds 5.27% interest
I'll trade you for some stock investments I made in 2000. How I wish I knew about the Bogleheads then.jeff1949 wrote:Your interest rate will vary depending on the inflation. Right now these bonds are paying 3.4% real rate together with an inflation rate of 1.87%.
3.4 + 1.87 = 5.27%
The inflation rate will change every 6 months so your total interest rate will change too.
I have some I Bonds purchased in May of 2000 that are paying that same rate. I also have some purchased in December of 2000 that are paying 5.47% currently.
Next November 1st is the next rate adjustment date so stay tuned.
Keep It Simple
Re: I Bonds 5.27% interest
I Bonds are the closest thing out there to a free lunch in my opinion. Guaranteed principal, tax deferred, inflation adjusted, state/local tax exempt, totally liquid after the first year...where else can you find something like that?Julieta wrote:I see I undervalued that IBond!
Re: I Bonds 5.27% interest
Perhaps I-bonds are nothing special. Other kinds of fixed income pay about the same. For instance, I have some TIAA traditional annuity paying 5% nowadays.
Re: I Bonds 5.27% interest
Guaranteed by the US govt, the ability to cash out at any time (after initial holding period), no federal tax until you cash out (unless you choose otherwise) and no state taxes?livesoft wrote:Perhaps I-bonds are nothing special. Other kinds of fixed income pay about the same. For instance, I have some TIAA traditional annuity paying 5% nowadays.
Re: I Bonds 5.27% interest
On bogleheads, of course. The maintainer of that website is a boglehead, but I won't spoil the surprise by telling you who it is.Julieta wrote:That table is exactly what I was looking for, where did you find it?Tier1Capital wrote:http://eyebonds.info/ibonds/home10000.html
Re: I Bonds 5.27% interest
I am happy to have some of those 3.4% I-Bonds! They were quite popular back on the old Morningstar forum. I believe it was Mel Lindauer that suggested back in 1998 that it would be wise to back up the truck and buy as many as you could.
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Re: I Bonds 5.27% interest
What sscritic said.
I saved that very useful bookmark from another bogleheads thread.
I saved that very useful bookmark from another bogleheads thread.
Re: I Bonds 5.27% interest
Yes, it is wonderful And I found out about them from the Bogleheads. I have a full year's batch from April (3.4%) and October 2001 (3.0%). They are now part of my Liability Matching Portfolio. At the time I invested in them, I was in the (Fed plus State) 40% tax bracket and I had limited space available in my 401K, so they really helped me build some wealth.
In order to minimize taxes when they come due (in my mid-60's), I may decide to cash them out over a period of 3 calendar years just before expiration.
Not only have they had a great return, but carving out what was effectively tax deferred space (for 30 years) within my taxable accounts allowed me to invest my OTHER investments more tax efficiently.
In order to minimize taxes when they come due (in my mid-60's), I may decide to cash them out over a period of 3 calendar years just before expiration.
Not only have they had a great return, but carving out what was effectively tax deferred space (for 30 years) within my taxable accounts allowed me to invest my OTHER investments more tax efficiently.
Re: I Bonds 5.27% interest
sscritic wrote:On bogleheads, of course. The maintainer of that website is a boglehead, but I won't spoil the surprise by telling you who it is.Julieta wrote:That table is exactly what I was looking for, where did you find it?Tier1Capital wrote:http://eyebonds.info/ibonds/home10000.html
I searched the forum numerous times. Did you keep it in a secret place or intentionally hide it for the favored few
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Re: I Bonds 5.27% interest
Is it you sscritic?sscritic wrote:On bogleheads, of course. The maintainer of that website is a boglehead, but I won't spoil the surprise by telling you who it is.Julieta wrote:That table is exactly what I was looking for, where did you find it?Tier1Capital wrote:http://eyebonds.info/ibonds/home10000.html
That is an awesome tool.
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Re: I Bonds 5.27% interest
Does the name really matter? Isn't it the I bond values you really want to know?Julieta wrote:I searched the forum numerous times. Did you keep it in a secret place or intentionally hide it for the favored fewsscritic wrote: On bogleheads, of course. The maintainer of that website is a boglehead, but I won't spoil the surprise by telling you who it is.
OK. Look at the list of members (it's right above your head). Click on the last letter of the "alphabet" (not Z). The name starts with a number that is not a number. The website is listed under website.
Happy hunting!
Re: I Bonds 5.27% interest
Just put eyebonds.info into the Bogleheads search engine. The first result will lead you the author.Julieta wrote:Is it you sscritic?
That is an awesome tool.
Re: I Bonds 5.27% interest
This table shows the base rate change every 6 months since I Bonds were introduced.
They also used to have great current information about the Bonds - but they have pretty
much reduced it to just current 6 month rates.
http://www.savings-bond-advisor.com/ser ... ase-rates/
They also used to have great current information about the Bonds - but they have pretty
much reduced it to just current 6 month rates.
http://www.savings-bond-advisor.com/ser ... ase-rates/
Re: I Bonds 5.27% interest
A problem with them at the current rates though is that after you eventually pay taxes on the inflation adjustment you will almost certainly lose purchasing power after holding them for many years.richard wrote:Guaranteed by the US govt, the ability to cash out at any time (after initial holding period), no federal tax until you cash out (unless you choose otherwise) and no state taxes?livesoft wrote:Perhaps I-bonds are nothing special. Other kinds of fixed income pay about the same. For instance, I have some TIAA traditional annuity paying 5% nowadays.
I do have some that have a base rate of 3.0% that are getting about 5% now. I bought these when you could still buy them with a credit card so I got a 3% rebate on them too.
Re: I Bonds 5.27% interest
No, and I agree.Julieta wrote: Is it you sscritic?
That is an awesome tool.
P.S. I was involved in some back and forth with the author a long time ago as we were both trying to understand the rules as given in the Code of Federal Regulations. Some of what I learned made its way into the wiki, and some of what he learned made its way into his web site.
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Re: I Bonds 5.27% interest
Would you agree that for a similar risk profile, IBonds are the best of the lot? In other words, if you want a higher yielding fixed income investment you have to take on much more risk than an IBond.Watty wrote:A problem with them at the current rates though is that after you eventually pay taxes on the inflation adjustment you will almost certainly lose purchasing power after holding them for many years.richard wrote:Guaranteed by the US govt, the ability to cash out at any time (after initial holding period), no federal tax until you cash out (unless you choose otherwise) and no state taxes?livesoft wrote:Perhaps I-bonds are nothing special. Other kinds of fixed income pay about the same. For instance, I have some TIAA traditional annuity paying 5% nowadays.
I do have some that have a base rate of 3.0% that are getting about 5% now. I bought these when you could still buy them with a credit card so I got a 3% rebate on them too.
Re: I Bonds 5.27% interest
man, do I have ignorance remorse.
came to BH late in my investing life and it took me another year to figure out the real value of I Bonds
Still, thanks Bogleheads, better late than never. Rich
came to BH late in my investing life and it took me another year to figure out the real value of I Bonds
Still, thanks Bogleheads, better late than never. Rich
Don't it always seem to go * That you don't know what you've got * Till it's gone
Re: I Bonds 5.27% interest
I was new to the Vanguard forum (wherever it was) and saw the recommendation for I Bonds. I also saw that Andrew Tobias was recommending the same thing. At worst, I could cash them in after a year, so I bought the max.
I didn't realize, at the time, that on a risk adjusted basis; this would be the best investment I would ever make.
I didn't realize, at the time, that on a risk adjusted basis; this would be the best investment I would ever make.
Re: I Bonds 5.27% interest
I bought two or three 1K I-bonds per year during those years. Truthfully, I held back from buying more because I listened to the popular argument of the day: why would investors lock themselves in for a year at such low fixed interest rates. Obviously, Mel was one of the few encouraging people to include I-Bonds as part of their portfolio. I am certainly glad I bought a few I-bonds during those early years (thank you Mel!) and will hold until 2029, 2030, 2031..., but wish I would have maxed out every year. As I recall, the maximum and purchasing options were wonderful--you could buy $30,000 worth of I-Bonds per year (please correct me if I am wrong) and few believe me when I tell them that I purchased the I-Bonds with a credit card that gave me a 5% cash back reward (add that in to my return!!!). I should have listened to Mel and maxed out every year. Yet, hindsight is always 20/20 and we move forward...kenschmidt wrote:I am happy to have some of those 3.4% I-Bonds! They were quite popular back on the old Morningstar forum. I believe it was Mel Lindauer that suggested back in 1998 that it would be wise to back up the truck and buy as many as you could.
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Re: I Bonds 5.27% interest
In 1998, CDs were yielding 5.67%. http://www.forecast-chart.com/interest-cd-interest.html It's interesting that you could get 5.27% REAL, only 0.4% less than the highest CD nominal rate and tax-deferred, from the government. I knew nothing about I-bonds at that time. Most people I knew who were into investing thought putting money in CDs or US tax-deferred bonds at that time was ridiculous. After all, you could count on at least 10% in the stock market, and that was a bad year (?!).Julieta wrote:I was checking the rate on I Bonds issued in September 1998. It is a whopping 5.27%! I believe that is when they were first issued.
That seems incredible to think of the compounded value of $10,000 today. How many folks have the September 1998 bonds and are you still buying them at the current rates?
$20,880!
Correct me if I'm wrong...but if I compound $10,000 for 14 years at 5.27%...
(I'm new to I Bonds so I'm in the learning phase)
Last edited by protagonist on Sun Jun 22, 2014 1:09 pm, edited 4 times in total.
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Re: I Bonds 5.27% interest
Yet, a balanced 25%TSM/25%TISM/50%TBM portfiolio had a CAGR of 6.41% from 1998 to 2013 (http://www.portfoliovisualizer.com/back ... peration=0).protagonist wrote: In 1998, CDs were yielding 5.67%. http://www.forecast-chart.com/interest-cd-interest.html Most people I knew who were into investing thought putting money in CDs or US tax-deferred bonds at that time was ridiculous. After all, you could count on at least 10% in the stock market (?!).
A portfolio still needs some stocks for growth.
[Edit:] I started investing (just a little, not much money) around these years; you're totally right that nobody was promoting fixed income at the time in the media...
Variable Percentage Withdrawal (bogleheads.org/wiki/VPW) | One-Fund Portfolio (bogleheads.org/forum/viewtopic.php?t=287967)
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Re: I Bonds 5.27% interest
Interesting: The TBM had a CAGR of 5.22% over the 1998-2013 period (http://www.portfoliovisualizer.com/back ... tYear=1998).
Variable Percentage Withdrawal (bogleheads.org/wiki/VPW) | One-Fund Portfolio (bogleheads.org/forum/viewtopic.php?t=287967)
Re: I Bonds 5.27% interest
Except when inflation is low for sustained periods, then it''s more like a free snack, which won't leave you financially full. I sold a bunch of ibonds when I saw 7-year Penfed CDs at 6.25%, so I ended up having a nicer lunch (apart from big yearly tax bills along the way). The varying yearly payouts also are a problem for retirees depending on steady income, so ibonds take a lot of long-term discipline, especially during low-inflation periods when other assets are returning much better, and unless you have a lot of assets, it's difficult to fund a safe long-term retirement using just returns and compounding from TIPS/ibonds, as Zvi Bodie proposed. Especially when those who invest heavily in equities might end up with a lifetime buffet, while the free lunch might be a bologna sandwich. Then of course there are the challenges of the TreasuryDirect website, which at least has gone beyond its Indiana Jones secret decoder cards to access one's funds.John3754 wrote:I Bonds are the closest thing out there to a free lunch in my opinion. Guaranteed principal, tax deferred, inflation adjusted, state/local tax exempt, totally liquid after the first year...where else can you find something like that?Julieta wrote:I see I undervalued that IBond!
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Re: I Bonds 5.27% interest
Yes, and a couple could by $60,000 worth, using their credit card(s) no less. So if you played your cards right (pun intended), you'd buy at the very end of the month, earn a full month's interest on the I Bonds, get perhaps 55 days float on the money to pay the CC, and get the CC rewards (mine was 2% cash back).dh wrote:I bought two or three 1K I-bonds per year during those years. Truthfully, I held back from buying more because I listened to the popular argument of the day: why would investors lock themselves in for a year at such low fixed interest rates. Obviously, Mel was one of the few encouraging people to include I-Bonds as part of their portfolio. I am certainly glad I bought a few I-bonds during those early years (thank you Mel!) and will hold until 2029, 2030, 2031..., but wish I would have maxed out every year. As I recall, the maximum and purchasing options were wonderful--you could buy $30,000 worth of I-Bonds per year (please correct me if I am wrong) and few believe me when I tell them that I purchased the I-Bonds with a credit card that gave me a 5% cash back reward (add that in to my return!!!). I should have listened to Mel and maxed out every year. Yet, hindsight is always 20/20 and we move forward...kenschmidt wrote:I am happy to have some of those 3.4% I-Bonds! They were quite popular back on the old Morningstar forum. I believe it was Mel Lindauer that suggested back in 1998 that it would be wise to back up the truck and buy as many as you could.
As they say, "Those were the days, my friend."
Best Regards - Mel |
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Re: I Bonds 5.27% interest
At current fixed rates of 0.1%, I do not understand the love I bonds receive today. Can someone enlighten?
If the the idea is these are cash replacement/savings account with inflation protection, I can understand. Is it purely to counter 1980's style inflation risk?
On the returns side, I don't see anything really great for current issue.
If the the idea is these are cash replacement/savings account with inflation protection, I can understand. Is it purely to counter 1980's style inflation risk?
On the returns side, I don't see anything really great for current issue.
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939
Re: I Bonds 5.27% interest
You are correct. It is not all that great. However, no other risk free option is any better.ray.james wrote:At current fixed rates of 0.1%, I do not understand the love I bonds receive today. Can someone enlighten?
If the the idea is these are cash replacement/savings account with inflation protection, I can understand. Is it purely to counter 1980's style inflation risk?
On the returns side, I don't see anything really great for current issue.
Jeff
Re: I Bonds 5.27% interest
I have a hard time getting excited about I bonds. Guess it may be a decent choice amongst all the bad riskless investments.
Here is an article from white coat investor http://whitecoatinvestor.com/series-i-b ... t-for-you/ that also questions "investing" in them.
Here is an article from white coat investor http://whitecoatinvestor.com/series-i-b ... t-for-you/ that also questions "investing" in them.
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Re: I Bonds 5.27% interest
At current rates, I Bonds are simply the best choice of most other available risk-free choices, and they offer the additional benefits of tax-deferral, freedom from state and local taxation and the possibility of being tax-free if used for qualifying educational expenses.jsl11 wrote:You are correct. It is not all that great. However, no other risk free option is any better.ray.james wrote:At current fixed rates of 0.1%, I do not understand the love I bonds receive today. Can someone enlighten?
If the the idea is these are cash replacement/savings account with inflation protection, I can understand. Is it purely to counter 1980's style inflation risk?
On the returns side, I don't see anything really great for current issue.
Jeff
Best Regards - Mel |
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Re: I Bonds 5.27% interest
If you own Ibonds, you should download the government's Savings Bond Wizard for full info about each bond: current rate, yield to date, accumulated interest etc. I'm happy to own a bunch of the 3.0% to 3.6% Ibonds. The latter have a yield to date above 6%.
Re: I Bonds 5.27% interest
+1
The reason for my original post was to demonstrate the benefits of these bonds. We have some excellent tools provided by those who responded and it is greatly appreciated. I have learned a lot.
The reason for my original post was to demonstrate the benefits of these bonds. We have some excellent tools provided by those who responded and it is greatly appreciated. I have learned a lot.
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