New money, 401k vs I-bonds

[zorobabel]

I'm 36 and have about 92% stocks, 2% bonds and 6% MM.
I plan to max out the Roth-IRA and the employer part of my solo 401k. Hopefully, I'll be left with about $5k that I'm not sure where to put this year. I think my stock allocation is too high and should be reduced. In light of the "Negative Interest Rates in U.S." thread, I'm considering buying I-bonds with the 0.5% fixed rate instead of contributing to the 401k (employee contributions) and buying bonds there.
Your thoughts please?

[sometimesinvestor]

i bonds look like a reasonable place to invest at this time when you compare yield and risk to 10 year bonds

[welderwannabe]

Agreed. .5% real is looking pretty good right now.

Buy them before november.

[ThriftyPhD]

If the choice is between contributing to a tax advantaged account (a pre-tax or Roth 401k) or an I-bond, I would choose the tax advantaged account. That space is gone forever if not used. And I'm a fan of I-bonds.

[zorobabel]

Thanks for the replies! I ended up making a $2.5k I-bond purchase for now.

[chw]

I made a purchase of IBonds when I was just a few years older than you (2001). At that time the fixed rate component of the IBonds was 3%, but money market rates were around 5%, so didn’t seem like a bad deal- though looking back, that fixed rate was a screaming deal. Fast forward to about 2010-11, those bonds were the best performing asset over that time frame in my portfolio.

I would say, IBonds are an excellent diversifier in your portfolio. My AA in my IPS allocates 20% of my fixed income allocation to IBonds. It may take awhile to fill whatever allocation you decide for these bonds, but given your age, you likely fill it over time. Even though the fixed rate currently aren’t that high, periodic inflation has a way of unexpectedly showing up, which will enhance the returns of the IBonds and your portfolio.