I-Bonds for emergency fund, now or wait?

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Atomic
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I-Bonds for emergency fund, now or wait?

Post by Atomic » Mon Oct 14, 2019 4:15 pm

Considering another $5K I-Bond purchase before the Nov 1 rate reset, what does your gut say on the new rate? Conventional wisdom?

Thank you,
Atomic

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HueyLD
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Re: I-Bonds for emergency fund, now or wait?

Post by HueyLD » Mon Oct 14, 2019 4:20 pm

My crystal ball tells me that the fixed rate will be lower. However, my crystal ball is somewhat cloudy.

Silence Dogood
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Re: I-Bonds for emergency fund, now or wait?

Post by Silence Dogood » Mon Oct 14, 2019 4:28 pm

My "gut" says the new fixed rate will be lower.

My brain knows that my gut doesn't know for sure.

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Atomic
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Re: I-Bonds for emergency fund, now or wait?

Post by Atomic » Mon Oct 14, 2019 4:30 pm

Thanks both. My gut says there is wisdom in crowds. My brain knows there is also stupidity. No judgement and I won't blame you either way!

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Ice-9
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Re: I-Bonds for emergency fund, now or wait?

Post by Ice-9 » Mon Oct 14, 2019 4:46 pm

I'm buying the I-bonds with fixed rate 0.5% which is between current real yield on 20-yr and 30-yr TIPS before the end of October.
https://www.treasury.gov/resource-cente ... =realyield

If by some crazy miracle I-Bond yields don't drop Nov 1, just buy more on Jan 1.

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Mel Lindauer
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Re: I-Bonds for emergency fund, now or wait?

Post by Mel Lindauer » Mon Oct 14, 2019 5:12 pm

My crystal ball says the same or lower so there's no reason to wait and lose a month and risk the odds of the lower rate.
Best Regards - Mel | | Semper Fi

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Re: I-Bonds for emergency fund, now or wait?

Post by z3r0c00l » Mon Oct 14, 2019 5:26 pm

I am all done for 2019, .5% is probably as good as it will get for a while. Would be happy to see .5% for next year but not holding breath. Would absolutely buy at .5%.

dcw213
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Re: I-Bonds for emergency fund, now or wait?

Post by dcw213 » Mon Oct 14, 2019 9:38 pm

I like optimization as much as the rest of them, but I find it kind of amusing how much hemming and hawing there is about when to buy iBonds theoughout the year. On each individual’s 10K, even the 0.5% fixed rate is about $50 per year. If iBonds are to truly matter for a portfolio one must buy every year over an extended period of time. You will win some, you will lose some from a timing perspective. The value is really liquid inflation protection, at such small levels of fixed above inflation it hardly matters given purchase limits.

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Ice-9
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Re: I-Bonds for emergency fund, now or wait?

Post by Ice-9 » Mon Oct 14, 2019 11:34 pm

dcw213 wrote:
Mon Oct 14, 2019 9:38 pm
I like optimization as much as the rest of them, but I find it kind of amusing how much hemming and hawing there is about when to buy iBonds theoughout the year. On each individual’s 10K, even the 0.5% fixed rate is about $50 per year. If iBonds are to truly matter for a portfolio one must buy every year over an extended period of time. You will win some, you will lose some from a timing perspective. The value is really liquid inflation protection, at such small levels of fixed above inflation it hardly matters given purchase limits.
I don't really consider my I-Bonds purchaed in the last decade as part of my portfolio. They're the cash I don't need for a least a year after I buy them, the top tier of my emergency fund, that after five years is as easy to access as an online savings account and before that with a mild 3-mo early withdrawal penalty. And to have that cash earning half a percent over inflation going forward at a time when actual portfolio investment TIPS bonds only pay that much if you extend maturities to more than 20 years is kinda cool.

Now, the I-bonds bought prior to the 2008-9 crash with 1.4% and higher fixed rates - those have long since been considered part of my portfolio. They were originally bought intended as part of an emergency fund as well, but when they started earning in real terms a higher rate than new TIPS were earning even nominally for much of the last decade, I recharacterized them as part of my retirement portfolio.

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Re: I-Bonds for emergency fund, now or wait?

Post by ivk5 » Tue Oct 15, 2019 2:08 am

https://tipswatch.com/ agrees Nov fixed rate likely to go lower.

As I’ve posted before I believe optimal times to buy I Bonds are Apr/Oct (max information advantage) or Nov/Dec (having waited out both rate resets expecting increases).

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Atomic
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Re: I-Bonds for emergency fund, now or wait?

Post by Atomic » Sun Nov 03, 2019 3:46 pm

Thanks, we guessed right. Nov1 fixed rate reset dropped it to 0.2%. Looks like I'll be back in April to ask for next year!

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