Just purchased 2015 maximum EE Series Bonds

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ArthurO
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Just purchased 2015 maximum EE Series Bonds

Post by ArthurO » Tue Jan 27, 2015 11:53 am

What are bogleheads views these days on EE Series Savings Bonds. I just purchases my Maximum for 2015 with this juicy 3.53% return over 2O years. I will not withdraw before 20 years, and slowly I am building a ladder which is only 4 steps high so far...

It will be nice in 16 years to take my 10K and double it every year...but 20 years sure is a long time.... only time will tell if this is the right choice...

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market timer
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Re: Just purchased 2015 maximum EE Series Bonds

Post by market timer » Tue Jan 27, 2015 12:07 pm

EE bonds are a great deal right now. I wonder if the doubling period for newly issued bonds will increase this year, perhaps to 30 years.

whadyaknow
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Re: Just purchased 2015 maximum EE Series Bonds

Post by whadyaknow » Tue Jan 27, 2015 12:09 pm

I'll be buying the maximum allowed next month. I don't plan to touch these funds for the next 20 years. 3.53% annualized seems like a good hedge against stagflation / low inflation / deflation. Tax deferral is the cherry on top.
80/20 Stock/Bond

John3754
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Re: Just purchased 2015 maximum EE Series Bonds

Post by John3754 » Tue Jan 27, 2015 12:13 pm

20 years is too long for me to commit, and seeing 3.53% as "juicy" smacks of recency bias to me. I see a lot of people advocating EE bonds saying they're going to hold them for 20 years in order to get the 3.53%, but would you buy a 20 year CD offering that same rate? Personally I stick to Series I Bonds and I don't really get the attraction to EE Bonds.
Last edited by John3754 on Tue Jan 27, 2015 12:17 pm, edited 1 time in total.

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Re: Just purchased 2015 maximum EE Series Bonds

Post by dodecahedron » Tue Jan 27, 2015 12:15 pm

whadyaknow wrote:I'll be buying the maximum allowed next month. I don't plan to touch these funds for the next 20 years. 3.53% annualized seems like a good hedge against stagflation / low inflation / deflation. Tax deferral is the cherry on top.
Carrying the sundae analogy further:

1) state tax-exemption on interest is the whipped cream (or maybe hot fudge, depending on your preferences)

2) option to use proceeds tax free for qualified higher ed expenses (or 529 contribution if timing of expenses is not ideal) for a dependent are the nuts on top (admittedly not everyone likes nuts and some are allergic, but nice option to have)

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Re: Just purchased 2015 maximum EE Series Bonds

Post by telemark » Tue Jan 27, 2015 12:18 pm

If I had some extra money that I knew I wouldn't need for 20 years, EE bonds would look very tempting. But my cash flow isn't that good and I'm not willing to give up that much liquidity, or take on that much inflation risk. A lot can happen in twenty years.

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Re: Just purchased 2015 maximum EE Series Bonds

Post by dodecahedron » Tue Jan 27, 2015 12:22 pm

John3754 wrote:20 years is too long for me to commit. I stick to I Bonds, personally.
Doing both I and EE bonds here to diversify in case inflation/interest heats up or not. I have a big fixed income allocation (way too big to fit into my tax-advantaged accounts) and like the idea of spreading it around and maximizing the amount of earnings on FI that can be deferred to later (and possibly donated to charity if I don't live long enough to need it all). Also influenced by Mel Lindauer's idea of creating your own annuity with EE bonds.

Edited to correct Mel's last name, with apologies.
Last edited by dodecahedron on Tue Jan 27, 2015 1:02 pm, edited 2 times in total.

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Re: Just purchased 2015 maximum EE Series Bonds

Post by supernova » Tue Jan 27, 2015 12:24 pm

John3754 wrote:20 years is too long for me to commit, and seeing 3.53% as "juicy" smacks of recency bias to me. I see a lot of people advocating EE bonds saying they're going to hold them for 20 years in order to get the 3.53%, but would you buy a 20 year CD offering that same rate? Personally I stick to Series I Bonds and I don't really get the attraction to EE Bonds.
EE Bonds are great if you don't mind holding them for 20 years. They will likely (obviously we don't know for sure) outperform I Bonds over a 20 year period.

The other nice thing about EE Bonds is you don't pay state tax, which would make them better than a 3.53% 20 year CD.

That said, I buy both. I Bonds are my emergency fund, EE Bonds are part of my bond allocation

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Re: Just purchased 2015 maximum EE Series Bonds

Post by John3754 » Tue Jan 27, 2015 12:39 pm

supernova wrote:The other nice thing about EE Bonds is you don't pay state tax, which would make them better than a 3.53% 20 year CD.
CDs can be held in tax advantaged accounts, EE Bonds cannot, yet I don't see anyone advocating going this long on CDs for 3.5%. Some here are begrudgingly taking 10 year CDs in their tax advantage accounts now for ~3%, but most here are advising against it. So why does it seem to be the consensus that a 3.5% taxable EE Bond thats going to be held for 20 years is a good idea, while a ~3% tax free CD thats going to be held for 10 years is a bad idea?

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Re: Just purchased 2015 maximum EE Series Bonds

Post by Mel Lindauer » Tue Jan 27, 2015 12:45 pm

dodecahedron wrote:
John3754 wrote:20 years is too long for me to commit. I stick to I Bonds, personally.
Doing both I and EE bonds here to diversify in case inflation/interest heats up or not. I have a big fixed income allocation (way too big to fit into my tax-advantaged accounts) and like the idea of spreading it around and maximizing the amount of earnings on FI that can be deferred to later (and possibly donated to charity if I don't live long enough to need it all). Also influenced by Mel Larimore's idea of creating your own annuity with EE bonds.
In addition to being co-authors of The Bogleheads' Guides, Taylor and I are very good friends, but we're not married. :D

It's Mel Lindauer and Taylor Larimore.
Best Regards - Mel | | Semper Fi

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Re: Just purchased 2015 maximum EE Series Bonds

Post by dodecahedron » Tue Jan 27, 2015 12:47 pm

John3754 wrote:
supernova wrote:The other nice thing about EE Bonds is you don't pay state tax, which would make them better than a 3.53% 20 year CD.
CDs can be held in tax advantaged accounts, EE Bonds cannot, yet I don't see anyone advocating going this long on CDs for 3.5%. Some here are begrudgingly taking 10 year CDs in their tax advantage accounts now for ~3%, but most here are advising against it. So why does it seem to be the consensus that a 3.5% taxable EE Bond thats going to be held for 20 years is a good idea, while a ~3% tax free CD thats going to be held for 10 years is a bad idea?
My tax advantaged accounts are already fully committed to other forms of FI. The noninflation protected part of the fixed income in my tax advantaged account is TIAA Traditional SRA paying 3% and fully liquid. I have zero interest in displacing that in favor of a 10 year CD paying 3.2%.

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Re: Just purchased 2015 maximum EE Series Bonds

Post by dodecahedron » Tue Jan 27, 2015 12:52 pm

Mel Lindauer wrote:
dodecahedron wrote:
John3754 wrote:20 years is too long for me to commit. I stick to I Bonds, personally.
Doing both I and EE bonds here to diversify in case inflation/interest heats up or not. I have a big fixed income allocation (way too big to fit into my tax-advantaged accounts) and like the idea of spreading it around and maximizing the amount of earnings on FI that can be deferred to later (and possibly donated to charity if I don't live long enough to need it all). Also influenced by Mel Larimore's idea of creating your own annuity with EE bonds.
In addition to being co-authors of The Bogleheads' Guides, Taylor and I are very good friends, but we're not married. :D

It's Mel Lindauer and Taylor Larimore.
Oops! Sorry. I have corrected my post above. Three syllable names of two very wise and generous folks beginning with L and ending with an r (sound). I have the feeling I may not be the first (or last) to make this mistake. Again, my apologies.

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ArthurO
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Re: Just purchased 2015 maximum EE Series Bonds

Post by ArthurO » Tue Jan 27, 2015 1:34 pm

John3754 wrote:
supernova wrote:The other nice thing about EE Bonds is you don't pay state tax, which would make them better than a 3.53% 20 year CD.
CDs can be held in tax advantaged accounts, EE Bonds cannot, yet I don't see anyone advocating going this long on CDs for 3.5%. Some here are begrudgingly taking 10 year CDs in their tax advantage accounts now for ~3%, but most here are advising against it. So why does it seem to be the consensus that a 3.5% taxable EE Bond thats going to be held for 20 years is a good idea, while a ~3% tax free CD thats going to be held for 10 years is a bad idea?
tax free space is limited, and in my case tax free space is used for retirement money bucket, purpose of that bucket is to grow my capital until retirement and not save and protect it, since I have 25 years left (hopefully) chances are money will grow.

taxable space is unlimited and so just the fact that I buy 10K EE bonds doesn't stop me from putting as much as I want in other financial instruments...

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Re: Just purchased 2015 maximum EE Series Bonds

Post by Dutch » Tue Jan 27, 2015 3:24 pm

ArthurO wrote:What are bogleheads views these days on EE Series Savings Bonds. I just purchases my Maximum for 2015 with this juicy 3.53% return over 2O years. I will not withdraw before 20 years, and slowly I am building a ladder which is only 4 steps high so far...

It will be nice in 16 years to take my 10K and double it every year...but 20 years sure is a long time.... only time will tell if this is the right choice...
I've been doing the same thing for a number of years now. Part of an early retirement strategy where the maturing EE bonds each year provide (part of) an income floor.

I've also maxed out I bonds (including the $5,000 through tax refund) each year. But this year I may forgo the extra $5,000 and hang back until October to make a decision on I bonds for 2015.

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Re: Just purchased 2015 maximum EE Series Bonds

Post by Mel Lindauer » Tue Jan 27, 2015 3:31 pm

dodecahedron wrote:
Mel Lindauer wrote:
dodecahedron wrote:
John3754 wrote:20 years is too long for me to commit. I stick to I Bonds, personally.
Doing both I and EE bonds here to diversify in case inflation/interest heats up or not. I have a big fixed income allocation (way too big to fit into my tax-advantaged accounts) and like the idea of spreading it around and maximizing the amount of earnings on FI that can be deferred to later (and possibly donated to charity if I don't live long enough to need it all). Also influenced by Mel Larimore's idea of creating your own annuity with EE bonds.
In addition to being co-authors of The Bogleheads' Guides, Taylor and I are very good friends, but we're not married. :D

It's Mel Lindauer and Taylor Larimore.
Oops! Sorry. I have corrected my post above. Three syllable names of two very wise and generous folks beginning with L and ending with an r (sound). I have the feeling I may not be the first (or last) to make this mistake. Again, my apologies.
No harm, no problem. Just wanted to let you (and others) know for future reference. Some newer folks might gather from that Taylor and I are related.
Best Regards - Mel | | Semper Fi

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Re: Just purchased 2015 maximum EE Series Bonds

Post by staythecourse » Tue Jan 27, 2015 3:34 pm

I am in the vast minority, but don't understand the interest in EE bonds. If you are going to hold something for 20 yrs. I would want A LOT more then a measly 3.5% return (barely above the usual inflation rate).

If you are going to hold them no matter what for 20 yrs. why not just throw it into stocks. I have not run the numbers, but SERIOUSLY doubt there have been many
20 yr. rolling returns where stocks produced just 3.5% nominal.

The reason to hold more bonds is to decrease volatility in the short run, but if you only care 20 yrs. from now then you are giving up a HUGE opportunity cost settling on a low returning investment on money not needed for so long down the road.

Heck, give me the money you invested and I will guarantee you 3.5% in 20 yrs. Then I would just invest that money in stocks. Then in 20 yrs. I would pocket the difference. There is the POSSIBILITY of failing on this concept, but the PROBABILITY is quite low. This doesn't sound like such a bad business idea. :D

Good luck.

p.s. I do admit I am not that knowledgeable on EE bonds, so if there is something I am missing would appreciate someone shedding some light for me.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: Just purchased 2015 maximum EE Series Bonds

Post by Dutch » Tue Jan 27, 2015 3:37 pm

staythecourse wrote:I am in the vast minority, but don't understand the interest in EE bonds. If you are going to hold something for 20 yrs. I would want A LOT more then a measly 3.5% return (barely above the usual inflation rate).

If you are going to hold them no matter what for 20 yrs. why not just throw it into stocks. I have not run the numbers, but SERIOUSLY doubt there have been many
20 yr. rolling returns where stocks produced just 3.5% nominal.

The reason to hold more bonds is to decrease volatility in the short run, but if you only care 20 yrs. from now then you are giving up a HUGE opportunity cost settling on a low returning investment on money not needed for so long down the road.

Heck, give me the money you invested and I will guarantee you 3.5% in 20 yrs. Then I would just invest that money in stocks. Then in 20 yrs. I would pocket the difference. There is the POSSIBILITY of failing on this concept, but the PROBABILITY is quite low. This doesn't sound like such a bad business idea. :D

Good luck.

p.s. I do admit I am not that knowledgeable on EE bonds, so if there is something I am missing would appreciate someone shedding some light for me.
Does that mean that you have a 0% bond allocation and you're 100% in stocks?

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Re: Just purchased 2015 maximum EE Series Bonds

Post by ArthurO » Tue Jan 27, 2015 3:44 pm

staythecourse wrote:I am in the vast minority, but don't understand the interest in EE bonds. If you are going to hold something for 20 yrs. I would want A LOT more then a measly 3.5% return (barely above the usual inflation rate).

If you are going to hold them no matter what for 20 yrs. why not just throw it into stocks. I have not run the numbers, but SERIOUSLY doubt there have been many
20 yr. rolling returns where stocks produced just 3.5% nominal.

The reason to hold more bonds is to decrease volatility in the short run, but if you only care 20 yrs. from now then you are giving up a HUGE opportunity cost settling on a low returning investment on money not needed for so long down the road.

Heck, give me the money you invested and I will guarantee you 3.5% in 20 yrs. Then I would just invest that money in stocks. Then in 20 yrs. I would pocket the difference. There is the POSSIBILITY of failing on this concept, but the PROBABILITY is quite low. This doesn't sound like such a bad business idea. :D

Good luck.

p.s. I do admit I am not that knowledgeable on EE bonds, so if there is something I am missing would appreciate someone shedding some light for me.
simple answer for you, look at the great depression when stocks lost 90% of their value. lets say stock returns are 8% average (quite possible), so doubling time of 10K is: 72/8 = 9 years, so in 19 years you would have about 40K, this is very nice indeed. And now lets assume a black swan happens in the worst possible time... in 20th year there is a 90% loss... now your 30K becomes a measily 4K, you just lost 60% of the principle in 20 years... and EE bonds are smelling good now aren't they?

The point is, if one wants a nice safe secure investment EE bonds are great as they provide a very nice 3.5% guaranteed with no risk. You may "WANT more return than 3.5%" for investing your money, but what you or anyone else wants means diddly squat to Mr. Market, he can be giving, he can be ruthless, and if you don't want to get burned EEs sound great, at least to me, this is my explanation...

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Re: Just purchased 2015 maximum EE Series Bonds

Post by Mel Lindauer » Tue Jan 27, 2015 5:13 pm

Savings Bonds expand your tax-deferred space and can be a great tool for tax-shifting. One can buy them when they're in a high tax bracket and redeem them 20 years later when they're retired and in a low (or no) tax bracket.
Best Regards - Mel | | Semper Fi

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Re: Just purchased 2015 maximum EE Series Bonds

Post by ArthurO » Tue Jan 27, 2015 7:20 pm

Mel Lindauer wrote:Savings Bonds expand your tax-deferred space and can be a great tool for tax-shifting. One can buy them when they're in a high tax bracket and redeem them 20 years later when they're retired and in a low (or no) tax bracket.
tax shifting... never thought about it, but it is an additional benefit of EEs, frankly I like them much more comparing to I bonds, but will get my 5K of Is with my tax refund, but will wait till November to make a decision about the annual 10K this year, the yield is just too paltry these days... maybe will get them anyway,

but at least to me EEs are no brainer....

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Re: Just purchased 2015 maximum EE Series Bonds

Post by Triple digit golfer » Tue Jan 27, 2015 7:30 pm

3.53%? I see 0.10%. What am I missing?

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Re: Just purchased 2015 maximum EE Series Bonds

Post by John3754 » Tue Jan 27, 2015 7:32 pm

ArthurO wrote:The point is, if one wants a nice safe secure investment EE bonds are great as they provide a very nice 3.5% guaranteed with no risk...at least to me EEs are no brainer....
My problem with EE Bonds, the thing that makes them NOT a no brainer to me, is that in order to get that "juicy", "guaranteed", "risk free" 3.5% return, I HAVE to hold them for 20 years! Otherwise, if I need that money for any reason whatsoever before that 20 years is up...I'm screwed. This is not a no brainer in my opinion, this is more like "I'd better think long and hard and make sure this is money I'm not going to need in the next two decades".

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Re: Just purchased 2015 maximum EE Series Bonds

Post by ArthurO » Tue Jan 27, 2015 7:32 pm

Triple digit golfer wrote:3.53%? I see 0.10%. What am I missing?
3.53% if you hold for 20 years, they are guaranteed to double in 20 years... if you intended shorter term, they are absurd... not good at all

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Re: Just purchased 2015 maximum EE Series Bonds

Post by gasman » Tue Jan 27, 2015 7:33 pm

Triple digit golfer wrote:3.53%? I see 0.10%. What am I missing?
If you hold a full twenty years the Treasury will double the face value. Doubling after 20 years gives a rate of 3.53%. Caution If you hold 19 years and sell you get practically nothing. SO you really have to be committed to holding for the full twenty years if you purchase today for the purchase to make sense.

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Re: Just purchased 2015 maximum EE Series Bonds

Post by John3754 » Tue Jan 27, 2015 7:33 pm

Triple digit golfer wrote:3.53%? I see 0.10%. What am I missing?
The fact that they're guaranteed to double if held for 20 years, which when annualized is 3.53%. If you cash them in before the 20 years is up you get the 0.10%.

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Re: Just purchased 2015 maximum EE Series Bonds

Post by ArthurO » Tue Jan 27, 2015 7:36 pm

John3754 wrote:
ArthurO wrote:The point is, if one wants a nice safe secure investment EE bonds are great as they provide a very nice 3.5% guaranteed with no risk...at least to me EEs are no brainer....
My problem with EE Bonds, the thing that makes them NOT a no brainer to me, is that in order to get that "juicy", "guaranteed", "risk free" 3.5% return, I HAVE to hold them for 20 years! Otherwise, if I need that money for any reason whatsoever before that 20 years is up...I'm screwed. This is not a no brainer in my opinion, this is more like "I'd better think long and hard and make sure this is money I'm not going to need in the next two decades".
agree with you, however if you have 1M in disposable investments that you hold, and you look for 20% of these to be safe, which are 200K, you can pretty safely put 10K into EE bonds, you still have to scratch your head what to do with the other 190k of safe to be investments, and if you need money. 190k or 200k will not break the bank,

of course if all you got is 10 or 20K that you want invested safely for now but accessible for emergencies, well I agree with you, with EEs you are locked for 20 years so in that particular case they may not be as good... although with 10k per year maximum, once you miss that boat it will not come back again...

only 1 10k boat per year, so jump on it or see it sail away forever... I've been jumping on for 4 years now and very happy with it...

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Re: Just purchased 2015 maximum EE Series Bonds

Post by Userdc » Tue Jan 27, 2015 7:36 pm

This might be the year I finally pull the trigger on EE bonds.

My long term tax exempt munis have performed well the last year, but that means the SEC yield has dropped to 2.16%. So, right now EE bonds look attractive even if I remain in a high tax bracket 20 years from now.

I still have trouble with the huge early withdrawal penalty, but its getting to the point where the good outweighs the bad.

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Re: Just purchased 2015 maximum EE Series Bonds

Post by ArthurO » Tue Jan 27, 2015 7:37 pm

gasman wrote:
Triple digit golfer wrote:3.53%? I see 0.10%. What am I missing?
If you hold a full twenty years the Treasury will double the face value. Doubling after 20 years gives a rate of 3.53%. Caution If you hold 19 years and sell you get practically nothing. SO you really have to be committed to holding for the full twenty years if you purchase today for the purchase to make sense.
well said....

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Re: Just purchased 2015 maximum EE Series Bonds

Post by John3754 » Tue Jan 27, 2015 7:42 pm

ArthurO wrote:only 1 10k boat per year, so jump on it or see it sail away forever... I've been jumping on for 4 years now and very happy with it...
And DW and I have each been jumping on the 10k I bond boat for the last 4 years. I guess we'll have to revisit this thread in 20 years and see who did better :D

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Re: Just purchased 2015 maximum EE Series Bonds

Post by ArthurO » Tue Jan 27, 2015 7:50 pm

John3754 wrote:
ArthurO wrote:only 1 10k boat per year, so jump on it or see it sail away forever... I've been jumping on for 4 years now and very happy with it...
And DW and I have each been jumping on the 10k I bond boat for the last 4 years. I guess we'll have to revisit this thread in 20 years and see who did better :D
I did both boats, + the 5K paper tax refund boat for I-bonds.... but this year I don't know if I will jump in the 10k I bond, will make that decision in November, if the fixed will come to something like 0.2% I am in... I think in May to hope for that is a lost cause...

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Re: Just purchased 2015 maximum EE Series Bonds

Post by ArthurO » Tue Jan 27, 2015 7:55 pm

Userdc wrote:This might be the year I finally pull the trigger on EE bonds.

My long term tax exempt munis have performed well the last year, but that means the SEC yield has dropped to 2.16%. So, right now EE bonds look attractive even if I remain in a high tax bracket 20 years from now.

I still have trouble with the huge early withdrawal penalty, but its getting to the point where the good outweighs the bad.
remember that government can change the rules at any time, like change doubling time from 20 to 30 years... this would be a disaster, and I would be out... so if you are planning on it, grab the opportunity while it still exists, don't procrastinate, I've learned my lesson with Tobyhanna CDs, first time around I could have opened 10 1K CDs each yielding 3.04% with possibility of adding money any time... I missed that boat, the deal dissapeared...

then it came back under Valor but only 1 offer per SSN... I did get that, but I put in 83K, anything more than 100k total and the yield drops to something like 0.05%...

I've learned my lesson, but because of procrastination... I am sort of stuck here :)

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Re: Just purchased 2015 maximum EE Series Bonds

Post by Grt2bOutdoors » Tue Jan 27, 2015 7:55 pm

John3754 wrote:
ArthurO wrote:only 1 10k boat per year, so jump on it or see it sail away forever... I've been jumping on for 4 years now and very happy with it...
And DW and I have each been jumping on the 10k I bond boat for the last 4 years. I guess we'll have to revisit this thread in 20 years and see who did better :D
To minimize regret, hold both. :D
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Re: Just purchased 2015 maximum EE Series Bonds

Post by ArthurO » Tue Jan 27, 2015 7:56 pm

Grt2bOutdoors wrote:
John3754 wrote:
ArthurO wrote:only 1 10k boat per year, so jump on it or see it sail away forever... I've been jumping on for 4 years now and very happy with it...
And DW and I have each been jumping on the 10k I bond boat for the last 4 years. I guess we'll have to revisit this thread in 20 years and see who did better :D
To minimize regret, hold both. :D
great idea... wait,... I am already holding both... any other ideas???

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Re: Just purchased 2015 maximum EE Series Bonds

Post by John3754 » Tue Jan 27, 2015 8:06 pm

ArthurO wrote: but this year I don't know if I will jump in the 10k I bond, will make that decision in November, if the fixed will come to something like 0.2% I am in...
So you're basing your decision on whether or not you get an extra $20 in interest a year per 10k? You're really going to miss the boat for $20 a year?

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Re: Just purchased 2015 maximum EE Series Bonds

Post by Userdc » Tue Jan 27, 2015 8:07 pm

ArthurO wrote:remember that government can change the rules at any time, like change doubling time from 20 to 30 years... this would be a disaster, and I would be out... so if you are planning on it, grab the opportunity while it still exists, don't procrastinate, I've learned my lesson with Tobyhanna CDs, first time around I could have opened 10 1K CDs each yielding 3.04% with possibility of adding money any time... I missed that boat, the deal dissapeared...
Don't sweat the small stuff. I can't get excited about locking in a ~zeroish after-tax real yield for 20 years on a very low single digit percentage of my portfolio.

I'll do it if I can convince myself it's the best option, but if I decide not to, I doubt I will be kicking myself for missing out on the EE bond trade.

3% real I-Bonds, on the other hand...

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Re: Just purchased 2015 maximum EE Series Bonds

Post by Triple digit golfer » Tue Jan 27, 2015 8:11 pm

Thank you all for the clarification.

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Re: Just purchased 2015 maximum EE Series Bonds

Post by gasman » Tue Jan 27, 2015 8:19 pm

ArthurO wrote:
Grt2bOutdoors wrote:
John3754 wrote:
ArthurO wrote:only 1 10k boat per year, so jump on it or see it sail away forever... I've been jumping on for 4 years now and very happy with it...
And DW and I have each been jumping on the 10k I bond boat for the last 4 years. I guess we'll have to revisit this thread in 20 years and see who did better :D
To minimize regret, hold both. :D


great idea... wait,... I am already holding both... any other ideas??
?
Yes. I Bonds and EE Bonds are taxable accounts only. Holding both is a hedge against inflation and deflation. In my tax deferred brokerage account I set up a ten year CD ladder and a ten year TIPs ladder. Same theme.

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ArthurO
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Re: Just purchased 2015 maximum EE Series Bonds

Post by ArthurO » Tue Jan 27, 2015 8:46 pm

John3754 wrote:
ArthurO wrote: but this year I don't know if I will jump in the 10k I bond, will make that decision in November, if the fixed will come to something like 0.2% I am in...
So you're basing your decision on whether or not you get an extra $20 in interest a year per 10k? You're really going to miss the boat for $20 a year?
yes I am, I don't think many realize this, but many small amounts add up to a big amount... if Vanguard for example raised Expense Ratio for Total Stock Market from 0.06% (or whatever it is right now) to 0.26% it would generate a huge uproar I am sure... rightfully so, as small % differences do amount to large monies at the end,

same way picture I bonds with 0.2% fixed on 10K over 20 years: 1 year investment : extra 400, 2nd year investment extra 380... etc... add it all up, and the sum at the end is quite impressive... I will leave that exercise to you...

neglecting small % differences in return in my view is a big mistake.. as small % difference in long term amounts to big absolute money difference...

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Mel Lindauer
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Re: Just purchased 2015 maximum EE Series Bonds

Post by Mel Lindauer » Tue Jan 27, 2015 9:07 pm

John3754 wrote:
ArthurO wrote:The point is, if one wants a nice safe secure investment EE bonds are great as they provide a very nice 3.5% guaranteed with no risk...at least to me EEs are no brainer....
My problem with EE Bonds, the thing that makes them NOT a no brainer to me, is that in order to get that "juicy", "guaranteed", "risk free" 3.5% return, I HAVE to hold them for 20 years! Otherwise, if I need that money for any reason whatsoever before that 20 years is up...I'm screwed. This is not a no brainer in my opinion, this is more like "I'd better think long and hard and make sure this is money I'm not going to need in the next two decades".
Obviously you'd want to have other options in place for your emergency fund, such as CDs, I Bonds over a year old, money market accounts, etc. before you consider buying EE Bonds. They obviously don't make for a good emergency fund and you should consider them dead money for 20 years.
Best Regards - Mel | | Semper Fi

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Re: Just purchased 2015 maximum EE Series Bonds

Post by z3r0c00l » Tue Jan 27, 2015 9:36 pm

I prefer iBonds, simply can't get behind doing anything other than 401k/stocks for 20 years (and even then, the 20 years is not required).

As Arthur mentioned, I will wait until May to buy iBonds for the chance at a .1 fixed - considering inflation is going nowhere fast right now.

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Re: Just purchased 2015 maximum EE Series Bonds

Post by ArthurO » Tue Jan 27, 2015 9:43 pm

z3r0c00l wrote:I prefer iBonds, simply can't get behind doing anything other than 401k/stocks for 20 years (and even then, the 20 years is not required).

As Arthur mentioned, I will wait until May to buy iBonds for the chance at a .1 fixed - considering inflation is going nowhere fast right now.
I bonds are fine investments for inflation protection, but historically speaking if you look far enough back to average things, inflation is about 3.2% annual and with EE bonds paying 3.53% in 20 years I think they will beat I bonds, but not by much, and they are illiquid, once bought they should be kept for 20 years, if one cannot commit to that time frame, then they should not be bought at all...

I usually buy both EEs and Is, but this year, I might skip Is, will wait and make the decision once this ship docks and waits for boarding...

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Re: Just purchased 2015 maximum EE Series Bonds

Post by acejacksingh » Wed Jan 28, 2015 12:34 pm

I want some ice-cream...


Personally I would stay away from this but haven't really looked into purchasing Bonds. I stick to bond funds :beer

aelfa
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Re: Just purchased 2015 maximum EE Series Bonds

Post by aelfa » Wed Jan 28, 2015 12:45 pm

I should change my username to "on_the_fence_investor" because that's where I am re: my fixed income AA... considering I, EE and/or TIAA Traditional in a GSRA.

For those of you dissatisfied with the 20-year wait / 3.5% reward for EE bonds, what are you doing instead (in taxable space)?

I see I Bonds mentioned, of course. Muni bond funds... anything else?

**Edited to clarify -- that has the same or similar risk/reward profile appropriate for a fixed income allocation **
Last edited by aelfa on Wed Jan 28, 2015 1:09 pm, edited 1 time in total.

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Re: Just purchased 2015 maximum EE Series Bonds

Post by Grt2bOutdoors » Wed Jan 28, 2015 12:55 pm

aelfa wrote:I should change my username to "on_the_fence_investor" because that's where I am re: my fixed income AA... considering I, EE and/or TIAA Traditional in a GSRA.

For those of you dissatisfied with the 20-year wait / 3.5% reward for EE bonds, what are you doing instead (in taxable space)?

I see I Bonds mentioned, of course. Muni bond funds... anything else?
Equities - foreign and domestic. Bonds - I bonds, EE bonds, Total Bond Market, Intermediate Tax Exempt.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Angst
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Re: Just purchased 2015 maximum EE Series Bonds

Post by Angst » Wed Jan 28, 2015 7:03 pm

I've purchased 6 rungs so far, and counting. 20-year rates have generally been well below 3.53% for most of that time. They're currently approaching 2.0%

I also think it's important to recognize that with every passing year, the yield to maturity (YTM) on previously purchased EE Bonds will continue to rise, reaching 100% at year 19. At some point, for each rung, it will become very hard to justify selling out that bond prior to maturity. My various rungs currently have the following yields to maturity:

Code: Select all

YEARS  Year Purchased  YTM
20     2015 purchase:  3.53%
19     2014 purchase:  3.72%
18     2013 purchase:  3.93%
17     2012 purchase:  4.16%
16     2011 purchase:  4.43%
15     2010 purchase:  4.73%
Nice calculators can be found here: http://www.moneychimp.com/features/rule72.htm

If/when rates rise to the point that 3.53% for 20 years is no longer strongly competitive, I'll stop buying. But I probably won't have cause to sell much if any of my prior purchases.

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Re: Just purchased 2015 maximum EE Series Bonds

Post by Mel Lindauer » Wed Jan 28, 2015 8:05 pm

Angst wrote:I've purchased 6 rungs so far, and counting. 20-year rates have generally been well below 3.53% for most of that time. They're currently approaching 2.0%

I also think it's important to recognize that with every passing year, the yield to maturity (YTM) on previously purchased EE Bonds will continue to rise, reaching 100% at year 19. At some point, for each rung, it will become very hard to justify selling out that bond prior to maturity. My various rungs currently have the following yields to maturity:

Code: Select all

YEARS  Year Purchased  YTM
20     2015 purchase:  3.53%
19     2014 purchase:  3.72%
18     2013 purchase:  3.93%
17     2012 purchase:  4.16%
16     2011 purchase:  4.43%
15     2010 purchase:  4.73%
Nice calculators can be found here: http://www.moneychimp.com/features/rule72.htm

If/when rates rise to the point that 3.53% for 20 years is no longer strongly competitive, I'll stop buying. But I probably won't have cause to sell much if any of my prior purchases.
A good start on your retirement annuity! http://www.forbes.com/sites/theboglehea ... n-annuity/
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Re: Just purchased 2015 maximum EE Series Bonds

Post by Toons » Wed Jan 28, 2015 8:22 pm

aelfa wrote:I should change my username to "on_the_fence_investor" because that's where I am re: my fixed income AA... considering I, EE and/or TIAA Traditional in a GSRA.

For those of you dissatisfied with the 20-year wait / 3.5% reward for EE bonds, what are you doing instead (in taxable space)?

I see I Bonds mentioned, of course. Muni bond funds... anything else?

**Edited to clarify -- that has the same or similar risk/reward profile appropriate for a fixed income allocation **
Equity mutual funds,Intermediate Tax Exempt,Total Bond,Individual Stocks.
No cds or ee bonds
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

broadstone
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Re: Just purchased 2015 maximum EE Series Bonds

Post by broadstone » Wed Jan 28, 2015 9:14 pm

So I have to pay Federal Tax on these EE bonds? When you factor in paying the IRS, why is it so attractive?

I live in a State that doesn't have income tax so I'm on the fence.

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Re: Just purchased 2015 maximum EE Series Bonds

Post by mikep » Wed Jan 28, 2015 9:25 pm

I'll consider when my mortgage is paid off, but for now extra $$ goes to the mortgage at 3%. In every other year I take the std deduction, so the 3% is tax free and I have 7.5 years left. I'll take 3% tax free over 3.53% taxable even if deferred. In EXACTLY 20 years, I'll probably be in my peak earning years anyway, which is the ideal redemption point for these bonds. What do you earn in years 20-30.. 0.1%?

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Re: Just purchased 2015 maximum EE Series Bonds

Post by staythecourse » Wed Jan 28, 2015 10:24 pm

John3754 wrote:The fact that they're guaranteed to double if held for 20 years, which when annualized is 3.53%. If you cash them in before the 20 years is up you get the 0.10%.
This is why I think EE bonds are a bad deal. You are basically telling someone give me 10k and after 20 yrs. I will double it to 20k. IF someone wants to do that deal I am more then happy to oblige with them and take them on that deal as it is a bad deal. For that length of commitment for my money I would demand a HECK of a lot more then 3.53% NOMINAL.

If you are worried about deflation go with long term treasuries which will do better then EE's if deflation happens in that 20 yr. period. Go with Ibonds or TIPS if you are worried about inflation over that 20 years. Go with an intermediate bond fund if you are agnostic about the next 20 yrs as after 5-6 years duration the money will increase with reinvestment at higher coupon rates. Normal inflation is around 3% so if "normal" happens over the next 20 yrs. you made a whopping 0.5% real return for money tied up for 20 yrs with EE bonds. I don't see how that is a good deal.

The only thing EE bonds makes me think is it exploits the "feels good and safe" core of every investor. Just remember do you think the government would offer something they think would help the borrower (you and me) or the lender (them)?

The government is no different then any other FA. They would/ like to separate people from their money as much as possible.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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