I and EE Bonds - What will the new rate be?

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What do you think the new rates for the Series I and EE bond will be?

Poll ended at Fri May 01, 2015 7:27 am

Series I - 0% fixed rate, 0% variable rate; Series EE bond - 0% fixed rate
12
39%
Series I - 0.10% fixed rate, 0% variable rate; Series EE bond 0.10% fixed rate
10
32%
Series I - 0.20% fixed rate, 0% variable rate; Series EE bond 0.20% fixed rate
3
10%
Series I - 0.25% fixed rate, 0% variable rate; Series EE bond 0.25% fixed rate
0
No votes
Series I - 0.40% fixed rate, 0% variable rate; Series EE bond 0.40% fixed rate
1
3%
Series I - 3.4% fixed rate, 0% variable rate; Series EE bond 0% fixed rate, 12 year doubling of principal feature (we can all dream)
1
3%
Other - insert your comments down below
4
13%
 
Total votes: 31

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Grt2bOutdoors
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I and EE Bonds - What will the new rate be?

Post by Grt2bOutdoors »

An informal poll with 2 weeks to go until the Treasury department announces the new fixed and variable rate for the Series I bond and the new fixed rate for the Series EE bond, what do you think the new rates will be for those bonds?
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pascalwager
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Re: I and EE Bonds - What will the new rate be?

Post by pascalwager »

The current variable rate is 1.48% for I-Bonds. Why would a 0.00% new variable rate be expected?
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dh
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Re: I and EE Bonds - What will the new rate be?

Post by dh »

The I bond inflation rate component that will be announced in May reflects the change in CPI-U between September 2014 and March 2015. The March 2015 number has not been announced, yet the February 2015 difference from September 2014 was negative. While that actual difference can be negative, it would be "pushed" up to 0%.
If you want to track it--the September 2014 number was 238.031, the March 2015 number will be available on the BLS website on the Friday, April 17.
Last edited by dh on Thu Apr 16, 2015 5:32 pm, edited 1 time in total.
Coles
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Re: I and EE Bonds - What will the new rate be?

Post by Coles »

I predict the EE Bond doubling feature will be changed to 30 years.
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SteelyEyed
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Re: I and EE Bonds - What will the new rate be?

Post by SteelyEyed »

Coles wrote:I predict the EE Bond doubling feature will be changed to 30 years.
So, for college planning purposes, one should by EE bonds when the child is -12 years old.
Day9
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Re: I and EE Bonds - What will the new rate be?

Post by Day9 »

Just want to chime in and say regardless of their interest rate EE bonds are guaranteed to double after 20 years. That works out to a 3.53% rate if held for 20 years. 20 year treasuries yield 2.31% today. Of course you can sell treasuries on the secondary market but EE bonds must be held for 20 years to get the double.

They're not for everybody but in some circumstances they can give the individual investor an advantage over big money. For example if you want to start a 90/10 stock/bond portfolio for your newborn's college fund you may want to make the initial fixed income portion entirely EE bonds.
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Dutch
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Re: I and EE Bonds - What will the new rate be?

Post by Dutch »

They would need a combined rate greater than 0% on I Bonds, in order to sell any. In other words they'd have to increase the fixed rate. At least that's what you'd think. But maybe they're not really interested in selling I Bonds.

For EE Bonds, the rate is of secondary concern imo as long as the 20 year doubling feature stays intact.
Coles
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Re: I and EE Bonds - What will the new rate be?

Post by Coles »

Day9 wrote:Just want to chime in and say regardless of their interest rate EE bonds are guaranteed to double after 20 years. That works out to a 3.53% rate if held for 20 years.
That's true of EE Bonds purchased today. It may not be true of EE Bonds purchased in May. The doubling period has changed before (it used to be 17 years, before that it was 12 years). How long until it changes again?
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market timer
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Re: I and EE Bonds - What will the new rate be?

Post by market timer »

Treasury rates have declined over the past six months, so I doubt savings bonds rates will rise.

My guess:
EE bonds: 0.1%
I bonds: 0%
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stevewolfe
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Re: I and EE Bonds - What will the new rate be?

Post by stevewolfe »

market timer wrote:Treasury rates have declined over the past six months, so I doubt savings bonds rates will rise.

My guess:
EE bonds: 0.1%
I bonds: 0%
+1. This is my thinking as well - effective rate on I at 0% (after correcting since it can't be negative) and EE bonds staying at 0.1%. I hope they don't mess with the doubling feature as mentioned above, however...
Spirit Rider
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Re: I and EE Bonds - What will the new rate be?

Post by Spirit Rider »

Dutch wrote:They would need a combined rate greater than 0% on I Bonds, in order to sell any. In other words they'd have to increase the fixed rate. At least that's what you'd think. But maybe they're not really interested in selling I Bonds.

For EE Bonds, the rate is of secondary concern imo as long as the 20 year doubling feature stays intact.
I don't think that factors into their decision making process. The fixed rate is set for thirty (30) years. So I think they are more concerned with long range projections. Case in point, the inflation rate was -2.78% for May 2009, yet they set the fixed rate to 0.10%.

The CPI-U/Variable Rate is going to come in -1.0% +/- some fractional amount. This was almost exclusively due to the oil price drop, which has stabilized/risen. So, I do not think this will cause the fixed rate to tick up more than a limited amount if at all.
JDDS
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Re: I and EE Bonds - What will the new rate be?

Post by JDDS »

I'm not sure why anyone would buy an I bond with a 0 fixed rate and 0 inflation rate. If the Treasury believes the same, we'll likely see a small fixed rate. I'm still puzzled by the near 0 EE rate; I guess maybe I'm just unwilling to consider anything below <0.5% even wit the 20 year doubling.
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Noobvestor
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Re: I and EE Bonds - What will the new rate be?

Post by Noobvestor »

JDDS wrote:I'm not sure why anyone would buy an I bond with a 0 fixed rate and 0 inflation rate.
To get the buy out of the way for the year while counting on higher variable rates later. It doesn't really matter if 10K is sitting in savings or I Bonds for 6 months if savings is yielding a few basis points. I don't consider either the fixed or inflation rates when I buy each January - I just max 'em out and call it a day.
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JoMoney
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Re: I and EE Bonds - What will the new rate be?

Post by JoMoney »

Even without expecting higher variable rates later, the current rate is better than what you can get in other short-term securities. Vanguard's Short-Term Bond index currently has a yield to maturity of about 1.10% , and you can expect the expense ratio of at least .10% to come off the top of that.

The current composite rate on I Bonds is 1.48%, with no additional expenses, higher quality, tax sheltered until you redeem them, and there's no scare talk about the Fed implementing fees to discourage investors from exiting bond funds or other liquidity concerns.
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beardsworth
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Re: I and EE Bonds - What will the new rate be?

Post by beardsworth »

Noobvestor wrote:
JDDS wrote:I'm not sure why anyone would buy an I bond with a 0 fixed rate and 0 inflation rate.
To get the buy out of the way for the year while counting on higher variable rates later.
I notice that the poster below this exchange has an avatar photo of Mark Twain.

Inflation seems very tame right now, but I think that if inflation could speak, it might say, in the words of Mark Twain upon reading a newspaper's obituary note of his own demise, "Reports of my death are greatly exaggerated." :)
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Re: I and EE Bonds - What will the new rate be?

Post by z3r0c00l »

Dutch wrote:They would need a combined rate greater than 0% on I Bonds, in order to sell any. In other words they'd have to increase the fixed rate. At least that's what you'd think. But maybe they're not really interested in selling I Bonds.
I was thinking the same way but then someone noted that if there is deflation, all bets are off and of course, the government will not have any trouble selling other bonds any time soon with the rates in Europe.
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dh
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Re: I and EE Bonds - What will the new rate be?

Post by dh »

The March 2015 was released today: CPI-U = 236.119 (-0.8% from September's 2014 CPI-U, 238.031). Hence every I-Bond with a fixed rate of 1.6% or less, will have a composite return of 0% for six months (the starting month depends on the I-Bond purchase date. If memory serves, I believe this is the second time this has happened (last time was late 2009 / early 2010).
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tipswatcher
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Re: I and EE Bonds - What will the new rate be?

Post by tipswatcher »

EE Bonds are looking very attractive for my 2015 savings bond investment (I know I can buy both but probably won't).

If the fixed rate stays at 0.0% on May 1, we can assume the market for new purchases of I Bonds will dry up. Would the Treasury see that and add a small fixed rate to hold up demand? If that happened, I Bonds would be a 'buy' in my opinion, even though the composite rate would be 0.0% for six months. Otherwise, wait until November and decide on I Bonds versus EE Bonds. I do wonder if the Treasury is feeling tempted to make EE Bonds less attractive.

More thoughts on inflation and I Bonds: http://tipswatch.com/2015/04/17/us-infl ... -on-may-1/
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feh
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Re: I and EE Bonds - What will the new rate be?

Post by feh »

Won't be buying I Bonds this year until November. Money is earning 1% at Ally until then.
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