Search found 475 matches

by tipswatcher
Thu Mar 14, 2024 5:51 pm
Forum: Investing - Theory, News & General
Topic: 5M, probably enough to retire to a frugal lifestyle
Replies: 180
Views: 15186

Re: 5M, probably enough to retire to a frugal lifestyle

https://www.wsj.com/lifestyle/careers/career-post-achievement-work-life-balance-46fc0ce2?mod=hp_featst_pos4 "Hy, 44, says he’s sitting on about $5 million, probably enough to retire to a frugal lifestyle , but likely not enough to sustain his family forever in pricey, coastal California." What do BHers think about the above quote? I chuckled a little. I am under the assumption that 5M will sustain an American family at a more than modest lifestyle anywhere in the US, but maybe I'm wrong. We are shooting for 5M and hoping to call it quits, early 40s, but live in Portland, OR (a little less pricey but still HCOL/West coastal). OK, let's be serious. He is 44 and has $5 million of net worth. (We didn't learn if that includes his prob...
by tipswatcher
Fri Feb 02, 2024 9:40 am
Forum: Investing - Theory, News & General
Topic: Vanguard Customer Service Mega-thread
Replies: 1512
Views: 167393

Vanguard service issues: Account transfer

[This thread has been merged into this on-going discussion. Moderator Pops1860] Another anecdote about Vanguard service: On Dec. 5, 2023, I initiated a transfer of a matured CD at Penfed.org to my Vanguard rollover IRA. Vanguard provided me the needed form, already filled in. I checked the form and it was complete. I had to get a medallion signature guarantee. I did and I mailed the form in. Two weeks later I received a message from Vanguard about a problem. I called. They said they couldn't read the scan of the form I sent because information was missing, such as my address and account number. It wasn't missing. I have a copy of the form and it is complete. Apparently, their scanner failed. They couldn't find the original form I sent in. ...
by tipswatcher
Mon Dec 04, 2023 10:24 am
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203121

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Sold 2 y-o bonds back in July, and decided to buy new ones this month with the same money. My next sale was supposed to be tomorrow, but I'll wait until January to defer the tax for a year. The difference between the current rate of that bond (3.38%) and what I could get somewhere else (5.0x%) is only a few $, so... I'll take the tax "saving" for this year. If you wait until the end of the month to buy (or the beginning of the month to sell), you would get the entire month of interest from the I-bond for the month plus the month of interest wherever you are keeping the cash. If you are implying that if you sell an I Bond early in a month, you get interest for that month, that is wrong. Interest is not earned until the month is co...
by tipswatcher
Sat Oct 14, 2023 11:51 am
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203121

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

NationalParks1 wrote: Sat Oct 14, 2023 11:35 am Anyone have opinions as to buying an I-bond in October versus November? I’m trying to decide which one would be better. I plan to hold it for at least the 5 years, but probably longer. I understand the fixed rate is unknown. Just curious if most people plan to hold off until November, in hopes for a higher rate.
I'd guess that most people who haven't yet bought their full allocation for 2023 will be waiting until after Nov. 1, in the hope that the fixed rate will rise. (It should rise. But you never know.) However, it shouldn't be lower and the variable rate will be higher after Nov. 1. Waiting makes sense and the only way it would backfire is if the Treasury does something very surprising on the fixed rate.
by tipswatcher
Fri Oct 13, 2023 8:32 am
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203121

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

I was thinking about the Treasury discretionary part of the fixed rate. What role do I-bonds (and EE bonds) play in the financing of the overall US debt? I can't find much in a Google search but I would think it would be minor to insignificant. So are I-bonds more of a marketing ploy along the lines of WWII-era war bonds than a key component of financing the debt? So my question is does the Treasury have an incentive to keep the I-Bonds relevant which would make them more likely to increase the fixed component and therefore in the news? This is a great question. Even in the October 2022 craziness, I imagine I Bonds and EE Bonds made up only a tiny portion of the Treasury's issuance. In that wild month of October 2022, investors bought $7 b...
by tipswatcher
Fri Aug 11, 2023 9:12 am
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203121

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

It's probably too early to ask this but what are people forecasting for the November fixed rate on I Bonds? I'm not sure how to guess the average TIPS rate through October, but my interpretation is the following method that anticipated the current rate happens to be sitting around 1.1% at this time. Future average changes in TIPS rates up or down could move the number. https://www.bogleheads.org/forum/viewtopic.php?p=7231977#p7231977 Is the November rate typically announced early enough in October, so that one can decide whether to purchase 2023 I-bonds in October or to wait for November ? Or does one just have to guess? The I Bond's new variable rate will be set by the September inflation report, to be issued Oct. 11. But you won't know t...
by tipswatcher
Fri Aug 11, 2023 8:39 am
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203121

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

It's probably too early to ask this but what are people forecasting for the November fixed rate on I Bonds? I'm not sure how to guess the average TIPS rate through October, but my interpretation is the following method that anticipated the current rate happens to be sitting around 1.1% at this time. Future average changes in TIPS rates up or down could move the number. https://www.bogleheads.org/forum/viewtopic.php?p=7231977#p7231977 Is the November rate typically announced early enough in October, so that one can decide whether to purchase 2023 I-bonds in October or to wait for November ? Or does one just have to guess? The I Bond's new variable rate will be set by the September inflation report, to be issued Oct. 11. But you won't know t...
by tipswatcher
Thu Aug 10, 2023 2:10 pm
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203121

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Just to add to the discussion. I redeemed two 2013 0.0% I Bonds this week and the money appeared in my Fidelity account it two days. I've already scheduled 2 gift box purchases of the 0.9% I Bonds to trigger on Aug. 29. The positive: I get an immediate boost in interest of almost 1%. The negative: I will owe taxes on the interest I earned. But I can use the excess money right now for some near-future travels. I have been a long-time advocate of just holding on to I Bonds until you need the money, no matter the fixed rate. But the gift-box strategy -- if you have a trusted partner -- allows you to replenish, to some extent. The next fixed rate may very well be higher, but that will be fine because I could buy I Bonds again in January, and p...
by tipswatcher
Wed Aug 09, 2023 5:50 pm
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203121

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Just to add to the discussion. I redeemed two 2013 0.0% I Bonds this week and the money appeared in my Fidelity account it two days. I've already scheduled 2 gift box purchases of the 0.9% I Bonds to trigger on Aug. 29. The positive: I get an immediate boost in interest of almost 1%. The negative: I will owe taxes on the interest I earned. But I can use the excess money right now for some near-future travels. I have been a long-time advocate of just holding on to I Bonds until you need the money, no matter the fixed rate. But the gift-box strategy -- if you have a trusted partner -- allows you to replenish, to some extent. The next fixed rate may very well be higher, but that will be fine because I could buy I Bonds again in January, and po...
by tipswatcher
Mon Jun 26, 2023 9:30 pm
Forum: Investing - Theory, News & General
Topic: Bob Brinker's newsletter Market Timer is shutting down
Replies: 191
Views: 53092

Re: Bob Brinker's newsletter Market Timer is shutting down

It looks like Bob Brinker's newsletter, Market Timer is shutting down this month (June 2023), due to personal reasons. https://en.wikipedia.org/wiki/Bob_Brinker Market Timer: http://www.bobbrinker.com/ I consider Bob Brinker -- along with Jack Bogle -- as the greatest inspirations in my attempts to reach "critical mass," as Bob always said. I heard his very first Money Talks broadcast -- Super Bowl Sunday, maybe 1986? -- driving to an evening party of Chicago friends. Did I really? Who knows, but I know I was an immediate fan of his sensible investment advice -- low-cost index investing and smart portfolio allocation. That ... and he taught me about I Bonds and TIPS in later years, investments that became a life-long fascination....
by tipswatcher
Wed Jun 21, 2023 9:17 am
Forum: Investing - Theory, News & General
Topic: Trading Treasuries (nominal and TIPS)
Replies: 4107
Views: 455552

Re: Trading Treasuries (nominal and TIPS)

I can't really say if there is an "expected" auction yield and definitely don't trust any auction prediction you see on a brokerage site (or even my site!). These yields can shift 10 basis points on the day of the auction, up or down. I know big-time traders can see a "when issued" prediction for these TIPS auctions (on the day of the auction), which tend to be pretty accurate. But I don't have a source for when-issued data. If anyone can point me to that from a reliable source, let us all know.
by tipswatcher
Wed Jun 21, 2023 7:30 am
Forum: Investing - Theory, News & General
Topic: Trading Treasuries (nominal and TIPS)
Replies: 4107
Views: 455552

Re: Trading Treasuries (nominal and TIPS)

I have yet to buy TIPS at auction (I have been buying on the secondary market). However, David Enna on Tipswatch https://tipswatch.com/ seems to be raving about a 4y 10m year TIPS coming for auction on Thursday. https://www.treasurydirect.gov/instit/annceresult/press/preanre/2023/A_20230615_4.pdf Does this really look like it will likely be a better deal than the offerings on the secondary market? And if so, why? (also, an observation: The Tipswatch article suggests an expected YTM of 1.81%....Fidelity lists it as 1.776%. Is this discrepancy due to a change in expectation since Enna wrote the article, or is Fidelity taking a "cut"? I would be buying in an IRA so buying through TD isn't possible anyway.) Hi guys, I actually have b...
by tipswatcher
Sun Apr 30, 2023 5:55 pm
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203121

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Does anyone think that they will ever offer I Bonds on any of the brokerage sites e.g Fidelity? Has there ever been any discussion about this? I Bonds and EE Bonds are not marketable securities, so they would not be on brokerage sites. Yotta markets a product they call an "I Bonds Bucket". https://www.withyotta.com/i-bonds With our I-Bonds Bucket, you don't have to deal with www.treasurydirect.gov and their endless hoops and forms. Just transfer money to your I-Bonds Bucket, and Yotta will do the rest! Not something I would use or recommend. But it exists. Yotta states they supply "banking for winners". Whatever that might mean. This is a by-product of 1) the I Bond mania caused by an 9.62% annualized return for purchas...
by tipswatcher
Tue Apr 25, 2023 2:39 pm
Forum: Investing - Theory, News & General
Topic: Tipswatch - Guessing I Bonds fixed rate, May 1, 2023
Replies: 131
Views: 26302

Re: Tipswatch - Guessing I Bonds fixed rate, May 1, 2023

impatientInv wrote: Tue Apr 25, 2023 1:59 pm
10Y TIPs rate dropped below 1.17%, after lower deposit holdings disclosed by FRC bank Q1 earnings report. Lets see what happens on May 1st..
It's definitely a moving target until the market closes Friday, April 28. Monday will be interesting.
by tipswatcher
Wed Apr 19, 2023 9:27 pm
Forum: Investing - Theory, News & General
Topic: Tipswatch - Guessing I Bonds fixed rate, May 1, 2023
Replies: 131
Views: 26302

Re: Tipswatch - Guessing I Bonds fixed rate, May 1, 2023

anon_investor wrote: Wed Apr 19, 2023 9:22 pm
Are you still planning to buy your full allocation of 2023 I Bonds on April 26?
I have already put in the order, yes. This isn't that big a deal. Just go with whatever path looks best.
by tipswatcher
Wed Apr 19, 2023 8:52 pm
Forum: Investing - Theory, News & General
Topic: Tipswatch - Guessing I Bonds fixed rate, May 1, 2023
Replies: 131
Views: 26302

Re: Tipswatch - Guessing I Bonds fixed rate, May 1, 2023

Indeed. Judging by the amount of "Make my purchase yearly regardless of interest rate" posts from this site- one could wonder if they feel the need to raise the fixed rate at all. From a strictly transactional point of view- if citizens are still going to "lend" the government money at 0.4%, why pay them double that? Back in October 2022, the demand for I Bonds was so strong that it crashed TreasuryDirect for several days. The Treasury really didn't "need" to raise the fixed rate on November 1, 2022, but it did raise it to 0.4%. Too low in my opinion, but it does show that the Treasury tries to match up with actual market conditions. I Bonds don't need to match up exactly with 5- or 10-year real yields, but th...
by tipswatcher
Wed Apr 19, 2023 7:58 pm
Forum: Investing - Theory, News & General
Topic: Tipswatch - Guessing I Bonds fixed rate, May 1, 2023
Replies: 131
Views: 26302

Re: Tipswatch - Guessing I Bonds fixed rate, May 1, 2023

impatientInv wrote: Wed Apr 19, 2023 10:47 am
Gadget wrote: Mon Apr 17, 2023 10:22 am As a long term I Bond investor, I think I may gamble on the May fixed rate going up. The short term interest on $30k in I bonds is nice for the April rate, but won't make a material difference to my retirement planning. I think I'd rather hope for a higher fixed rate for 30 years as I keep building tax deferred space in I bonds.
10Y TIPs rate crossed above 1.34% today and 6 months average is >1.3%. Fed outlooks remains keeping rates higher for longer and no banking crisis.

Quite likely that fixed rate in May will be 0.8%. upper end of 0.4-1.0% forecast.

https://www.cnbc.com/quotes/US10YTIP
I'd say 0.7% to 0.8% looks like the CORRECT fixed rate, at this point Who knows what the Treasury will do?
by tipswatcher
Sun Apr 16, 2023 6:33 pm
Forum: Investing - Theory, News & General
Topic: Tipswatch - Guessing I Bonds fixed rate, May 1, 2023
Replies: 131
Views: 26302

Re: Tipswatch - Guessing I Bonds fixed rate, May 1, 2023

FYI to everyone, I would suggest not making investment decisions solely based on my speculative guesses on the I Bond fixed rate. However, I did post an updated version of my forecast on Friday morning: https://tipswatch.com/2023/04/14/i-bond-dilemma-buy-in-april-buy-in-may-or-dont-buy-at-all/ At this point, I think the fixed-rate floor is probably 0.4% and the high end is probably 0.8%. I wouldn't be surprised by a 0.6% fixed rate. If we get 1.0%, celebrate. I decided to buy a full allocation (two-account couple) on April 26. If the fixed rate rises substantially above 0.4%, I'd use the gift box strategy to buy an additional set sometime before the end of October. This strategy works well for couples, maybe not so great for others. I think...
by tipswatcher
Sat Apr 15, 2023 7:40 am
Forum: Investing - Theory, News & General
Topic: Index ratio on upcoming 5-year tips auction April 20 2023 - is there a website for Index Ratios?
Replies: 8
Views: 1004

Re: Index ratio on upcoming 5-year tips auction April 20 2023 - is there a website for Index Ratios?

FYI, a week before each auction the Treasury posts the announcement, which includes the index ratio.

It will be 1.00241 on the settlement date of April 28.

https://www.treasurydirect.gov/instit/a ... 0413_2.pdf

You can find these announcements by going to TreasuryDirect, and navigating to the Upcoming Auctions page:

https://www.treasurydirect.gov/auctions/upcoming/
by tipswatcher
Thu Apr 06, 2023 8:48 pm
Forum: Investing - Theory, News & General
Topic: Tipswatch - Guessing I Bonds fixed rate, May 1, 2023
Replies: 131
Views: 26302

Re: Tipswatch - Guessing I Bonds fixed rate, May 1, 2023

Yes, less than a month ago (March 8) we were looking at a 10-year real yield of 1.66%, with a trend toward a slow climb higher. Then came Silicon Valley Bank. At today's close the 10-year real yield is 1.06%, 60 basis points lower. At this point I can theorize that the Treasury should at least hold the fixed rate at 0.4%, but we've got nearly a month to go before the big decision. At the last rate reset, the 10-year real yield was 1.58%, but it had risen very quickly. The 0.4% fixed rate was a conservative move by the Treasury. But now 0.4% looks about right, or maybe just slightly low. This trend makes me lean toward making an I Bond investment up to the max in April to nail down the 6.89% composite rate for six months. If the fixed rate d...
by tipswatcher
Sat Feb 04, 2023 10:26 pm
Forum: Investing - Theory, News & General
Topic: The 10 Most Important Things I Tell Clients by Allan Roth
Replies: 13
Views: 4998

Re: The 10 Most Important Things I Tell Clients by Allan Roth

My wife and i used Allan Roth for a financial plan back in 2018. He's great. No nonsense. Hourly fee. Simple, useful advice but he gets your ass in gear to get done the things that need doing, but inertia has kept you from doing. The huge benefit is simplifying your investments and getting asset location correct. Then, as he recommends, we fired him. Because that's the way he works. The plan is still moving along, but I am sure we will go back to him in the future to settle some new issues.
by tipswatcher
Thu Jan 12, 2023 5:07 pm
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203121

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

<<For this example, wouldn't selling on October 1 2023 give you the interest from August, September & October as penalty?>>

I Bond interest is not earned (even for the 3-month penalty) until the first day of the next month. You have to hold all the way through October and redeem early in November to have October counted as a penalty month.
by tipswatcher
Thu Jan 12, 2023 2:38 pm
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203121

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

If one were not terribly interested in holding 2022 iBonds for the long haul, and assuming that the variable rate is going to reset really low, if I bought in February 2022, would selling in May 2023 or later lose only the three months of what will be presumably a really low rate? Someone check me on this, but if you bought in February you got 6 months (Feb-July 2022) at the Nov 2021 rate of 3.56%. Then you get another 6 months (Aug 2022-Jan 2023) at the May 2022 rate reset of 9.62%. The you will get 6 months (Feb-July 2023) at the Nov 2022 rate of 6.48%. Then starting in August of this year, you will get the new rate (announced in May) for six months. So, assuming that is a really low rate, you would want to accrue 3 months (Aug, Sept, Oc...
by tipswatcher
Mon Jan 09, 2023 10:40 am
Forum: Investing - Theory, News & General
Topic: Tipswatch - "I Bonds: A not-so-simple buying guide for 2023"
Replies: 7
Views: 3095

Re: Tipswatch - "I Bonds: A not-so-simple buying guide for 2023"

Market timing? I suppose so, but it's a bit more complex. The reason I make these suggestions is the $10,000 per person per year purchase limit. If there was no limit, you could buy I Bonds at any time, no problem. So it's smart to use your one (or two) purchases a year to your best advantage. There is no difference in investment return if you buy in January or you buy in April. You are getting 6.89% for six months and a permanent fixed rate of 0.4%. I'm guessing I will be highly likely to buy before May, because the next variable rate could be quite low (we'll see.) The only iffy situation will be if real yields head strongly higher by April. I think that is unlikely. But last year was a huge surprise. Buying in January every year also mak...
by tipswatcher
Tue Jan 03, 2023 3:42 pm
Forum: Personal Investments
Topic: Bought $2000 worth of 5 year TIPs. Was charged $2029.
Replies: 29
Views: 4124

Re: Bought $2000 worth of 5 year TIPs. Was charged $2029.

I did write a followup posting on this specific reopening auction because E*Trade made an error in the amount it charged buyers and had to issue refunds (I learned that from reader comments on my original article on the auction). Here is the pricing analysis: https://tipswatch.com/2022/12/24/lets-t ... s-auction/

And the actual costs, which match what you paid:

Image
by tipswatcher
Sat Dec 17, 2022 9:11 pm
Forum: Investing - Theory, News & General
Topic: Please explain VTIP
Replies: 13
Views: 3467

Re: Please explain VTIP

Although I prefer to own individual TIPS and hold them maturity (combined with I Bonds) I do have an allocation in VTIP. I prefer to own this short-term fund, which lowers the duration and interest rate risk. It also lowers potential capital gains if real yields start falling in the future. When you look at VTIP, always look at the total return, not the fluctuations in NAV. VTIP had a total return of 4.86% in 2019, 4.95% in 2020, 5.36% in 2021 and for 2022 year-to-date it is down 2.88%. A total return of -2.88% is disappointing in a time of very high inflation, but it certainly isn't disastrous. Next year could be better.
by tipswatcher
Wed Nov 02, 2022 4:25 pm
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203121

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

aj76er wrote: Wed Nov 02, 2022 2:50 pm
MrJedi wrote: Wed Nov 02, 2022 12:57 pm There are some quirky exceptions, like deflation (TIPS can adjust downward while I Bonds have a floor of 0% and cannot go negative).
If TIPS are held until maturity, I believe you are guaranteed the greater of the current value or the original principle. So if prolonged deflation takes the TIPS value negative, you are made whole if you don’t sell.
I wouldn't use the term "principal" because at times in reissues or on the secondary market you are buying inflation-accrued principal that is above par value. Only the par value is guaranteed to be returned at maturity.
by tipswatcher
Mon Oct 31, 2022 7:51 am
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203121

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Coltrane75 wrote: Mon Oct 31, 2022 7:35 am Anyone want to take a guess at what the fixed rate will be on Nov 1?

I'm going to go out on a limb and guess 0.7%!
I've been saying it should be at least 0.5%, which is consistent with the fixed rate during the Fed's last tightening cycle from November 2018 to October 2019. But I have no idea what the Treasury will do. Keeping it at 0.0% is definitely possible, and raising it to 0.7% also seems like a possibility, given that the 5-year real yield on a TIPS is now 1.52% and the 10-year is 1.51%. That's a substantial gap.
by tipswatcher
Wed Oct 26, 2022 8:59 am
Forum: Investing - Theory, News & General
Topic: The 4% Rule Just Became a Whole Lot Easier - Allan Roth
Replies: 409
Views: 76152

Re: The 4% Rule Just Became a Whole Lot Easier - Allan Roth

From the article: "I built a 4.36% real (inflation-adjusted) systematic withdrawal portfolio using a 30-Year TIPS ladder. In June, I wrote about safe spend rates and concluded that a balanced portfolio could only support a 3.3% real withdrawal rate for a 30 year period with a 90% chance of success. There are differing opinions on what a safe spend rate should be. For instance, Mark Hulbert recently wrote in Barron’s that a 1.9% withdrawal is more appropriate. At the suggestion of Bob Huebscher, the editor of this publication, I decided to try something different. I built a strategy backed by the U.S. government with Treasury Inflation Protected Securities (TIPS) that supports a reasonably level real 4.3% withdrawal rate for 30 years. ...
by tipswatcher
Wed Oct 26, 2022 8:54 am
Forum: Investing - Theory, News & General
Topic: IRA 100% bonds?
Replies: 24
Views: 2258

Re: IRA 100% bonds?

For an investor over 60 and therefore able to access their IRA without penalty, is there any good reason to not make their IRA 100% bonds/bond funds, to avoid the unfavorable tax treatment on interest payments and keep only index/ETF stock funds and muni bonds in taxable, to the extent possible? Is there any downside to being 100% fixed income in an IRA? I don't see any downside, as long as it fits your overall asset allocation. My traditional IRA is totally in fixed income (pretty much half in total bond and half in inflation protected -- funds and individual TIPS). My Roth IRA, though is 100% in stocks, since that will be the last money I spend. Not true for my wife, but it all works out to the stock / fixed income / cash allocations we ...
by tipswatcher
Wed Oct 19, 2022 7:12 pm
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203121

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Creditcardguy wrote: Wed Oct 19, 2022 7:07 pm This may have been answered already, but if I buy an Ibond gift of $10K today for 2024, do I get 6 full months at the 9.62% or just the last 10 days or so?
If you buy in October, the I Bond will get 6 months at 9.62% and six months at 6.48%. After that, depends on future inflation.
by tipswatcher
Wed Oct 19, 2022 10:46 am
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203121

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Tipswatch has a pretty good analysis here that basically shows if fixed jumped up to 0.5% it would take about 8 years to catch up vs taking the 9.62% now with 0% fixed. https://tipswatch.com/2022/10/14/ignore-the-fixed-rate-drama-buy-i-bonds-in-october/ The chart member tipswatcher uses is flawed in two ways: one minor and one major. First here's the chart as presented in his blog. I've started the "Year" column at 0 instead of 1. This helps us see that the November purchase with an assumed 0.5% fixed rate overtakes the October purchase with a 0% fixed rate after 7.5 years, not 8. I've also added a "Diff" column on the right comparing the value of the two purchases. When #Cruncher speaks, everyone should listen. I alway...
by tipswatcher
Mon Oct 10, 2022 7:03 am
Forum: Investing - Theory, News & General
Topic: I-bonds fixed rate [How is rate determined, compare to TIPS]
Replies: 21
Views: 3296

Re: I-bonds fixed rate

nps wrote: Thu Oct 06, 2022 5:57 am
Why buy the Oct 20 at 150 bp when higher yields are offered in the aftermarket?
I was just throwing out a rough estimate. The current Treasury estimate is 178bp. Could be higher, could be lower, by Oct. 20.
by tipswatcher
Sun Oct 09, 2022 9:06 pm
Forum: Investing - Theory, News & General
Topic: I-bonds fixed rate [How is rate determined, compare to TIPS]
Replies: 21
Views: 3296

Re: I-bonds fixed rate

If I were buying for 30 years I would seriously consider TIPS at current rates over I bonds. Which specific Tip would be most equivalent to a 30 year ibond today? My feeling, and others will disagree, is that an I Bond is best compared to a 5-year TIPS, since the I Bond has a 5-year term before the 3-month interest penalty ends. They are directly comparable, at least in the length of term. But you can't compare just the real yield, because I Bonds have advantages in deflation protection, flexible maturity and tax-deferred earnings. The accrued principal can never go down, and I Bonds don't trade on the secondary market like TIPS. Is that a positive or a negative? In my opinion, it is a positive. Then we come to the real yield: The TIPS bei...
by tipswatcher
Tue Oct 04, 2022 8:37 pm
Forum: Personal Investments
Topic: Treasury Direct site for an update with a new design
Replies: 16
Views: 2779

Re: Treasury Direct site for an update with a new design

I prowled through the new site (which is overlaid on the old site) and then posted my thoughts:

https://tipswatch.com/2022/10/04/treasu ... e-sort-of/

The old site never bothered me, I was used to it and knew where to go to do what I needed to do. They new site's outer shell isn't fabulous, but it makes the site more readable, the font is attractive, and it works better on mobile. TD made an effort to simplify the language and navigation. It's a start, but this redesign won't end the complaints about account creation and support.
by tipswatcher
Mon Oct 03, 2022 1:19 pm
Forum: Investing - Theory, News & General
Topic: "Is The Time Right For Roth Conversions?"
Replies: 18
Views: 2635

Re: "Is The Time Right For Roth Conversions?"

Just to clarify: The 2023 surcharges are recently released: https://www.cms.gov/newsroom/fact-sheets/2023-medicare-parts-b-premiums-and-deductibles-2023-medicare-part-d-income-related-monthly This means that these brackets for 2023 pertain to your 2021 tax filings. Those 2021 modified adjusted gross income amount (using the new scheduled) will determine your premiums in 2023. Whatever you do this year will ultimately determine what you pay in 2024 although you won't have those 2024 brackets until the fall of next year. Yes, what a crazy system. You learn about your surcharge six or seven months after you filed your tax return. But at least I can look at these new numbers and assume next year's numbers won't be lower (they've never gone low...
by tipswatcher
Sun Oct 02, 2022 10:24 am
Forum: Investing - Theory, News & General
Topic: "Is The Time Right For Roth Conversions?"
Replies: 18
Views: 2635

Re: "Is The Time Right For Roth Conversions?"

VanGar+Goyle wrote: Sun Oct 02, 2022 9:07 am
tipswatcher wrote: Sun Oct 02, 2022 8:23 am Now we are running up to potentially higher Medicare IRMAA surcharges, so holding off until we see the new IRMAA levels in November. We'd like to do more.
The 2023 Medicare IRMAA brackets and premiums were published early last week. You can do about 7% more ;)
https://www.cms.gov/newsroom/fact-sheet ... ed-monthly
Wow, thank you! I figured the SSA would wait until the September inflation report is released. This is good news, with the IRMAA levels rising about 7.9% for the second tier of IRMAA for joint filers. And the monthly surcharges are falling about 3%.
by tipswatcher
Sun Oct 02, 2022 8:23 am
Forum: Investing - Theory, News & General
Topic: "Is The Time Right For Roth Conversions?"
Replies: 18
Views: 2635

Re: "Is The Time Right For Roth Conversions?"

Bogleheads: Note: I am surprised that Maria did not mention the fact that a bear market can be an excellent time to convert. What do you think about this? Best wishes Taylor Jack Bogle's Words of Wisdom: "Tax-deferred plans are especially valuable jewels because tax deferral, combined with low-cost investing, is the most valuable weapon in the long-term investor's arsenal." Agree. My general preference is to withdraw needed cash from traditional IRAs when the market is high and do Roth conversions when the market is down. So now is a very good time for conversions, in my opinion. We did a Roth conversion in March 2020 and that worked out well (until this year at least, because the Roth is entirely in stock index funds. But we are...
by tipswatcher
Fri Sep 30, 2022 7:36 am
Forum: Investing - Theory, News & General
Topic: TIPS price going down while inflation above expectation
Replies: 9
Views: 1180

Re: TIPS price going down while inflation above expectation

This is expected when interest rates are rising . Interest rates are rising which causes the price of bond funds to fall but should also make dividend payouts increase. Check this wiki entry on Bond Fund Duration . If you hold on to the Bond Fund long enough you should be made whole through greater dividend payments. But Tip5 etf has relatively low eff dur of 2.48 https://www.ishares.com/uk/individual/en/products/287202/ishares-tips-0-5-ucits-etf One very interesting trend in 2022 and especially in the last few weeks has been the strong surge higher in 5-year TIPS real yields, which was predictable since this maturity seems to be most sensitive to increases in the federal funds rate. 5-year real yields Jan 1 = -1.58% Mar 1 = -1.58% Jun 1 =...
by tipswatcher
Mon Sep 19, 2022 7:31 am
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203121

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

acegolfer wrote: Mon Sep 19, 2022 7:20 am
tipswatcher wrote: Mon Sep 19, 2022 7:11 am I am not quoting a 10-year nominal yield. The 10-year TIPS real yield is currently 1.07%, based on Treasury's daily estimate: https://home.treasury.gov/resource-cent ... nth=202209

This is the TIPS real yield, the yield above inflation. (The nominal 10-year is now at 3.45%).
TY. Is this nominal or real yield: https://www.cnbc.com/quotes/US10YTIP

Curious. If the nominal yield is 3.45% and the real yield is 1.07%, what's the inflation rate? Isn't it about 8% yoy?
The TIPS real yield is based on future inflation, not past inflation. So, 1.07% above future inflation.
by tipswatcher
Mon Sep 19, 2022 7:11 am
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203121

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

acegolfer wrote: Mon Sep 19, 2022 7:01 am
tipswatcher wrote: Mon Sep 19, 2022 6:59 am but with the 10-year TIPS real yield surging above 1%,
Incorrect. The nominal yield is about 1.1% now. The real yield should be negative given 6%+ inflation rate. What's your source?
I am not quoting a 10-year nominal yield. The 10-year TIPS real yield is currently 1.07%, based on Treasury's daily estimate: https://home.treasury.gov/resource-cent ... nth=202209

This is the TIPS real yield, the yield above inflation. (The nominal 10-year is now at 3.45%).
by tipswatcher
Mon Sep 19, 2022 6:59 am
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203121

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

With the inflation component of the I Bond composite rate alteady so high that it's got Treasury Direct overwhelmed, there's really no reason for them to raise the fixed rate and add fuel to the fire. My money's on no change in the fixed rate. I agree with Mel, but with the 10-year TIPS real yield surging above 1%, the *fair* thing to do for the Treasury would be to raise the fixed rate to 0.2%, or at least 0.1%. This is because the fixed rate is permanent, a 30-year component, and it should track higher when the 10-year real yield rises. The last time the 10-year real yield was above 1% just before the fixed-rate reset was in November 2018 and the Treasury raised the I Bond's fixed rate to 0.5%. Before that, you have to go all the way bac...
by tipswatcher
Sun Sep 18, 2022 7:28 am
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203121

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

acegolfer wrote: Sat Sep 17, 2022 4:00 pm
HueyLD wrote: Thu Sep 15, 2022 6:39 am With August CPI-U of 296.171 and assuming no change in inflation for September (unlikely), the new I bond inflation rate should be 6.02% annualized.

Inflation or deflation in September will change that estimate. So, I am going to stick my neck out and predict a range of 5.95% to 6.05%.
https://tipswatch.com/2022/09/13/u-s-in ... rity-cola/ says 6.04% not 6.02%. I suppose the blogger made an error in his calculation.
Yes, I did make a mistake and was altered to the problem by a HueyLD. The post has been corrected. I appreciate the crowdsourcing! Anytime you see any problem with anything I write, please alert me. Bogleheads are the greatest.
by tipswatcher
Thu Jul 21, 2022 1:59 pm
Forum: Investing - Theory, News & General
Topic: Anybody participating in 10 year TIPs
Replies: 23
Views: 2550

Re: Anybody participating in 10 year TIPs

After all the angst, the auction had a nice result: Real yield of 0.630% and a coupon rate of 0.625%

https://tipswatch.com/2022/07/21/new-10 ... investors/
by tipswatcher
Thu Jul 21, 2022 9:52 am
Forum: Investing - Theory, News & General
Topic: Anybody participating in 10 year TIPs
Replies: 23
Views: 2550

Re: Anybody participating in 10 year TIPs

Oh well, the European Central Bank made a surprise move to raise short-term rates higher by 50 basis points, which is sending both nominal and real yields lower in the United States. So far, steadily lower. At this point a yield of 0.61% looks likely, putting the coupon rate at 0.50%. But the markets are in flux. Hate when this happens on an auction day. No huge deal. Stay calm. I will stay calm.
by tipswatcher
Thu Jul 21, 2022 7:20 am
Forum: Investing - Theory, News & General
Topic: Anybody participating in 10 year TIPs
Replies: 23
Views: 2550

Re: Anybody participating in 10 year TIPs

Foodbuilder wrote: Wed Jul 20, 2022 4:36 pm Anybody participating in 10 year TIPs auction tomorrow 7/27?
And why is it a good option or why is it not a good option for a bond portion of a portfolio?
I am buying at this auction, and it looks like a good chance this TIPS will get a coupon rate of 0.625%, they highest rate since January 2019. This is in a traditional IRA, and I have been converting some bond fund holdings (including SCHP) into TIPS throughout this year. Will 10-year real yields go higher? I would guess so, probably at least to 1.25% if the Fed does its job. But do I trust the Fed to do its job? Not sure, so I am willing to grab positive yields while I can. This is a hold-to-maturity investment.
by tipswatcher
Mon Jul 11, 2022 9:37 pm
Forum: Investing - Theory, News & General
Topic: How do you spot a new Treasury bond for sale at Vanguard? How does it look different form the secondary ones already
Replies: 9
Views: 1060

Re: How do you spot a new Treasury bond for sale at Vanguard? How does it look different form the secondary ones alread

for sale? When you get to Vanguard's "Find brokered CDs and bonds" page, click on "Treasuries" in the line of links under your account number. Then click on the "auction" choice next to Market. At that point you can see the items available for purchase at auction. Only some of the items will have a "buy" link on the left-hand side, and those are the ones available to purchase at the current time. Vanguard has a window for auction purchases; it guess these go live when the auction is a few days away? A week? I never quite understood this system. Right now, the only auctions available for participation are the 1-year to be auctioned July 12; the 10-year note to be auctioned July 12, and the 30-year bon...
by tipswatcher
Wed Jul 06, 2022 9:14 pm
Forum: Investing - Theory, News & General
Topic: Is there a limit to the percentage of my portfolio that should be in inflation protected instruments?
Replies: 109
Views: 10362

Re: Is there a limit to the percentage of my portfolio that should be in inflation protected instruments?

TheTimeLord wrote: Wed Jun 29, 2022 11:30 am TIPS and I-Bonds now make up about 13% of my portfolio. I plan to continue to purchase TIPS for liability matching purposes. Is there a limit to the percentage of my portfolio that should be in these inflation protected instruments?
I am a big fan of inflation protection, but my allocation to this sector is about right where you are, a bit less than 15%. It's been hard to add to these holdings when real yields were so miserably low. That tide is turning, but I still like the idea of keeping inflation protected investments in the 15% range, and filling out the rest with low-cost stock index funds, total bond funds and safe nominal bonds or bank CDs.
by tipswatcher
Tue Jun 21, 2022 9:11 pm
Forum: Investing - Theory, News & General
Topic: TIPS attractive to you?
Replies: 34
Views: 3223

Re: TIPS attractive to you?

windaar wrote: Tue Jun 21, 2022 6:31 pm TIPS should be part of one's long term plan, not a reaction to current events. The more we tinker the less we are Bogleheads. I saw the madness unleashed in 2008 and again in 2020, and it's being unleashed again.
In general, I'd agree, but once the Federal Reserve began actively entering the Treasury market to influence yields, forcing TIPS real yields deeply negative, it was time to pause buying TIPS. Now that trend is reversing and TIPS are again becoming attractive.
by tipswatcher
Tue Jun 21, 2022 7:16 am
Forum: Investing - Theory, News & General
Topic: 5-year breakeven inflation rate 2.8%
Replies: 30
Views: 5715

Re: 5-year breakeven inflation rate 2.8%

JayB wrote: Tue Jun 21, 2022 7:11 am

Also, it has so often been said that TIPS can be attractive as a hedge against unexpected inflation. Does unexpected mean inflation that is beyond historic averages? Or does it mean inflation beyond b/e points? Or something else?
I'd say that unexpected inflation at its most basic definition is inflation higher than the inflation breakeven rate for that term. But realistically, unexpected inflation is what we are experiencing right now -- inflation 600 basis points higher than predictions. This current inflationary surge is the reason we invest in I Bonds and TIPS.