“Beating” the market with i bonds

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eleventhstreet
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“Beating” the market with i bonds

Post by eleventhstreet » Wed Sep 11, 2019 11:09 am

So the efficient market hypothesis explains why your typical investor cannot outperform and should stick to passive

Wouldn’t ibonds be the exception to this rule for two reasons
1. The limited number of bonds issued gives an inherent advantage to the retail investor as it is issued in only limited numbers and only to individuals
2. The interest rate is set semiannually and the seller is “forced” to keep that rate which allows buyers to engage in what is essentially arbitrage.
When the current rate was announced in May it was similar to the tips rate. Now the tips rate has plunged and Ibonds haven’t yet


Could anyone here argue why, aside from simplicity with multiple accounts, how passive investing can match an ibond for a individuals taxable account. Aside from the 1 year lockout this would run circles around say vanguards tips index fund vaipx when you consider the no expenses and the superior rate offered at this time via ibonds

I would go as far as to say with the inverted yield curve, ibonds represent one of the few government “freebies” like Roth IRA that everyone who can should max out if it does not mess up their a.a.

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Re: “Beating” the market with i bonds

Post by megabad » Wed Sep 11, 2019 11:19 am

eleventhstreet wrote:
Wed Sep 11, 2019 11:09 am
Could anyone here argue why, aside from simplicity with multiple accounts, how passive investing can match an ibond for a individuals taxable account. Aside from the 1 year lockout this would run circles around say vanguards tips index fund vaipx when you consider the no expenses and the superior rate offered at this time via ibonds
Sure. There have two glaring problems (though I still love them). They are taxable (eventually unless you meet certain requirements), and you can only buy $5-10k per year. TIPs are good options for large retirement accounts. I-bonds are great for small taxable ones.

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Re: “Beating” the market with i bonds

Post by Nate79 » Wed Sep 11, 2019 11:30 am

eleventhstreet wrote:
Wed Sep 11, 2019 11:09 am
So the efficient market hypothesis explains why your typical investor cannot outperform and should stick to passive

Wouldn’t ibonds be the exception to this rule for two reasons
1. The limited number of bonds issued gives an inherent advantage to the retail investor as it is issued in only limited numbers and only to individuals
2. The interest rate is set semiannually and the seller is “forced” to keep that rate which allows buyers to engage in what is essentially arbitrage.
When the current rate was announced in May it was similar to the tips rate. Now the tips rate has plunged and Ibonds haven’t yet


Could anyone here argue why, aside from simplicity with multiple accounts, how passive investing can match an ibond for a individuals taxable account. Aside from the 1 year lockout this would run circles around say vanguards tips index fund vaipx when you consider the no expenses and the superior rate offered at this time via ibonds

I would go as far as to say with the inverted yield curve, ibonds represent one of the few government “freebies” like Roth IRA that everyone who can should max out if it does not mess up their a.a.
What "market" are you beating with ibonds?

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eleventhstreet
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Re: “Beating” the market with i bonds

Post by eleventhstreet » Wed Sep 11, 2019 11:39 am

Nate79 wrote:
Wed Sep 11, 2019 11:30 am
eleventhstreet wrote:
Wed Sep 11, 2019 11:09 am
So the efficient market hypothesis explains why your typical investor cannot outperform and should stick to passive

Wouldn’t ibonds be the exception to this rule for two reasons
1. The limited number of bonds issued gives an inherent advantage to the retail investor as it is issued in only limited numbers and only to individuals
2. The interest rate is set semiannually and the seller is “forced” to keep that rate which allows buyers to engage in what is essentially arbitrage.
When the current rate was announced in May it was similar to the tips rate. Now the tips rate has plunged and Ibonds haven’t yet


Could anyone here argue why, aside from simplicity with multiple accounts, how passive investing can match an ibond for a individuals taxable account. Aside from the 1 year lockout this would run circles around say vanguards tips index fund vaipx when you consider the no expenses and the superior rate offered at this time via ibonds

I would go as far as to say with the inverted yield curve, ibonds represent one of the few government “freebies” like Roth IRA that everyone who can should max out if it does not mess up their a.a.
What "market" are you beating with ibonds?
In a typical three fund or four fund portfolio (and lets assume for simplicity sake you only have taxable accounts), a small portion of your overall portfolio is held in inflation protected treasuries.
If you have a 3 or 4 fund portfolio, chances are you have a total bond fund in there. That total bond fund holds TIPS as part of the overall bond market. Market weighted TIPS in TBM would be about 3%.(But technically vanguard in its total bond market excludes TIPS)
Right now in a taxable account the yields on a I bond widely beats the yield on a TIPs.
Therefore, if instead of passively investing you found a way to recreate a total bond market fund sans TIPS and then just fill in the TIPS portion via i-bonds you would "beat" your traditional interest. So this mean Vanguard total bond market + i bonds would beat a total bond market that contains TIPS

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Re: “Beating” the market with i bonds

Post by Whakamole » Wed Sep 11, 2019 11:44 am

megabad wrote:
Wed Sep 11, 2019 11:19 am
eleventhstreet wrote:
Wed Sep 11, 2019 11:09 am
Could anyone here argue why, aside from simplicity with multiple accounts, how passive investing can match an ibond for a individuals taxable account. Aside from the 1 year lockout this would run circles around say vanguards tips index fund vaipx when you consider the no expenses and the superior rate offered at this time via ibonds
Sure. There have two glaring problems (though I still love them). They are taxable (eventually unless you meet certain requirements), and you can only buy $5-10k per year. TIPs are good options for large retirement accounts. I-bonds are great for small taxable ones.
It's $10K per year, but a standard living trust can buy an additional $10K. If you are married, your spouse has the same limits, plus you can buy an additional $5K by using your tax refund. It adds up.

I-bonds have a lot of caveats. Having to manage almost everything through Treasury Direct, a lack of paper statements (which means heirs may not even know about held bonds), and since I-bonds are redeemed after 30 years, if you buy them early in your career, you might have to pay interest during peak earnings years (and peak tax rates.) Also unless taxes are paid as interest accrues each year, any beneficiaries will not get the benefit of a "step up" in cost basis.

All that being said, I still like them. Even as a single person, I can get an additional $25K/year in tax-deferred space, and they can be used for an emergency fund after a year. I wish I bought more back when the fixed rate was higher and you could buy them with a credit card and get miles/cash back - those were the days.

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Re: “Beating” the market with i bonds

Post by oldcomputerguy » Wed Sep 11, 2019 12:04 pm

eleventhstreet wrote:
Wed Sep 11, 2019 11:39 am
In a typical three fund or four fund portfolio (and lets assume for simplicity sake you only have taxable accounts), a small portion of your overall portfolio is held in inflation protected treasuries.
If you have a 3 or 4 fund portfolio, chances are you have a total bond fund in there. That total bond fund holds TIPS as part of the overall bond market.
I believe this may be incorrect. According to its Prospectus and its most recent Annual Report, Vanguard Total Bond Index Fund (VBTLX) does not hold any TIPS, only nominal Treasuries. Also, this fact sheet from Bloomberg explicitly says that inflation-linked securities are excluded from the Bloomberg-Barclays Aggregate Bond Index.
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Re: “Beating” the market with i bonds

Post by Day9 » Wed Sep 11, 2019 12:30 pm

Yes I believe everyone can improve their portfolios by buying the 0.5% real I-Bonds right now and adjusting the rest of their bond portfolio such that it retains the same credit & duration risk levels. For example, you can buy $10k of these attractive I-Bonds, and increase the duration of the rest of your bond portfolio so that it is the same as it was before you bought them.
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Re: “Beating” the market with i bonds

Post by Big Dog » Wed Sep 11, 2019 12:40 pm

I-bonds have a lot of caveats.
Too many caveats for me to make it worthwhile.

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Re: “Beating” the market with i bonds

Post by dcabler » Wed Sep 11, 2019 1:02 pm

Whakamole wrote:
Wed Sep 11, 2019 11:44 am
megabad wrote:
Wed Sep 11, 2019 11:19 am
eleventhstreet wrote:
Wed Sep 11, 2019 11:09 am
Could anyone here argue why, aside from simplicity with multiple accounts, how passive investing can match an ibond for a individuals taxable account. Aside from the 1 year lockout this would run circles around say vanguards tips index fund vaipx when you consider the no expenses and the superior rate offered at this time via ibonds
Sure. There have two glaring problems (though I still love them). They are taxable (eventually unless you meet certain requirements), and you can only buy $5-10k per year. TIPs are good options for large retirement accounts. I-bonds are great for small taxable ones.
It's $10K per year, but a standard living trust can buy an additional $10K. If you are married, your spouse has the same limits, plus you can buy an additional $5K by using your tax refund. It adds up.

I-bonds have a lot of caveats. Having to manage almost everything through Treasury Direct, a lack of paper statements (which means heirs may not even know about held bonds), and since I-bonds are redeemed after 30 years, if you buy them early in your career, you might have to pay interest during peak earnings years (and peak tax rates.) Also unless taxes are paid as interest accrues each year, any beneficiaries will not get the benefit of a "step up" in cost basis.

All that being said, I still like them. Even as a single person, I can get an additional $25K/year in tax-deferred space, and they can be used for an emergency fund after a year. I wish I bought more back when the fixed rate was higher and you could buy them with a credit card and get miles/cash back - those were the days.
Same here (except for the single part). :oops:

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Re: “Beating” the market with i bonds

Post by Jack FFR1846 » Wed Sep 11, 2019 1:03 pm

Whakamole wrote:
Wed Sep 11, 2019 11:44 am
I wish I bought more back when the fixed rate was higher and you could buy them with a credit card and get miles/cash back - those were the days.
I wish those opportunities were still here. On top of the credit card payments, they could be redeemed back then in 6 months, instead of a year today and each person could buy $30k worth. And they actually didn't keep track of that (I bought more by mistake one year). Our family of 4 bought $120k a year for 3 or 4 years, selling bonds bought earlier in the year to pay for new ones. Back then, we vacationed in Aruba and would be able to upgrade to 1st class with the miles we got doing this.

We were able to keep some bonds along the way. Today, we have $370k worth in paper bonds.
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Re: “Beating” the market with i bonds

Post by sharx » Wed Sep 11, 2019 1:19 pm

This is the first i'm hearing that total bond funds don't hold TIPs, why do they do that?

Tangential question: If I'm already in the highest tax bracket at age 30 should I consider buying I bonds and supplementing with munis in taxable and perhaps other treasuries? The risk is that tax rates might be higher when I'm 60 but also if I retire early I might not need to pay them.

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Re: “Beating” the market with i bonds

Post by eleventhstreet » Wed Sep 11, 2019 2:44 pm

Okay and here is the last point is I bonds I never see mentioned:

Your TIPs can lose value if inflation stays steady but interest rates rise (I know not likely the two are very closely correlateD)
Imagine you get your tips at 1% with an inflation rate of 2 and then suddenly the inflation rate is still 2 but they're selling tips at 2%. Sure, you can sell on the secondary market before maturity but you're not getting face value. With I bonds, you can sell. So if I buy now and interest rates rise Im dumping those bonds.


Edit: I just realized the downside counter-argument is that I bonds cannot be sold on the secondary market. So if I do end up with some sweet 0.5% fixed rate I bonds when its 2031 and interest rates are now -10%, I wont be able to sell them for their true value

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Re: “Beating” the market with i bonds

Post by mhc » Wed Sep 11, 2019 4:01 pm

Ibonds are not worth my effort. They may be fine for some, but not usefull for others.

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Re: “Beating” the market with i bonds

Post by bhsince87 » Wed Sep 11, 2019 4:09 pm

eleventhstreet wrote:
Wed Sep 11, 2019 2:44 pm
Okay and here is the last point is I bonds I never see mentioned:

Your TIPs can lose value if inflation stays steady but interest rates rise (I know not likely the two are very closely correlateD)
Imagine you get your tips at 1% with an inflation rate of 2 and then suddenly the inflation rate is still 2 but they're selling tips at 2%. Sure, you can sell on the secondary market before maturity but you're not getting face value. With I bonds, you can sell. So if I buy now and interest rates rise Im dumping those bonds.


Edit: I just realized the downside counter-argument is that I bonds cannot be sold on the secondary market. So if I do end up with some sweet 0.5% fixed rate I bonds when its 2031 and interest rates are now -10%, I wont be able to sell them for their true value
I was going to point this out, but am happy to see you came to the conclusion on your own!

This is pretty much what happened in the last few years. So some folks here cashed in their older I-bonds, but then had to worry about the tax hit.
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Re: “Beating” the market with i bonds

Post by Whakamole » Wed Sep 11, 2019 4:43 pm

sharx wrote:
Wed Sep 11, 2019 1:19 pm
This is the first i'm hearing that total bond funds don't hold TIPs, why do they do that?
"Total Bond" excludes a lot of things, not just TIPS. No munis, no junk.

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Re: “Beating” the market with i bonds

Post by HawkeyePierce » Wed Sep 11, 2019 4:52 pm

Even though they're called "bonds" I prefer to think of I Bonds as more like a tax-advantaged inflation-linked non-brokered CD.

I think they're super useful and will be maxing out my allowance this year but unlike regular bonds where we hope their value can rise to help offset stock declines, I Bonds will only protect their own principal, not your portfolio as a whole. I plan to consider them as part of my emergency fund and/or mini-pseudo-liability-matching to protect against unexpected inflation in early retirement.

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Re: “Beating” the market with i bonds

Post by Phineas J. Whoopee » Wed Sep 11, 2019 5:06 pm

sharx wrote:
Wed Sep 11, 2019 1:19 pm
This is the first i'm hearing that total bond funds don't hold TIPs, why do they do that?
...
A common complaint here is Vanguard's Total Bond Market Index Fund, VBTLX, isn't truly "total" by some definitions of the term. Don't go by the name. Look under the hood.

Here's the fact sheet for the index it follows, and Vanguard uses the float-adjusted variant listed on page five.

Even if Vanguard fixed every complaint I've read on this forum, it still wouldn't be total. Defaulted bonds continue to trade.

Names and ticker symbols are good identifiers. Statutory prospectuses and their implications are good descriptions.

PJW

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Re: “Beating” the market with i bonds

Post by lazyday » Wed Sep 11, 2019 5:25 pm

eleventhstreet wrote:
Wed Sep 11, 2019 11:09 am
Could anyone here argue why, aside from simplicity with multiple accounts, how passive investing can match an ibond for a individuals taxable account.
This board has generally been positive on I bonds from its start, as far as I recall. I don’t think many here would spend a lot of energy arguing that I bonds are worse than bond index funds.

You might be underestimating the value of simplicity though. If having a simple, (nearly) market weighted portfolio keeps an investor from making harmful changes to the portfolio over time, then that investor might be better off than an investor who complicates the portfolio with I bonds and other investments.

Otherwise, I bonds can be very good investments, probably superior to TIPS today. Depending on our needs, they also might be considered the safest of all investments. Having some very safe assets in the portfolio also might help one to “stay the course”. I believe this benefit is one reason that W Bernstein favors short term Treasuries over the Total Bond fund, and in my opinion I bonds are even better for this purpose, depending on one’s personal situation, including taxes.

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Re: “Beating” the market with i bonds

Post by dyangu » Sat Oct 12, 2019 10:31 am

With current rates, I assume the consensus is to max out Ibonds before Nov new rates?

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Re: “Beating” the market with i bonds

Post by Silence Dogood » Sat Oct 12, 2019 10:37 am

HawkeyePierce wrote:
Wed Sep 11, 2019 4:52 pm
Even though they're called "bonds" I prefer to think of I Bonds as more like a tax-advantaged inflation-linked non-brokered CD.

I think they're super useful and will be maxing out my allowance this year but unlike regular bonds where we hope their value can rise to help offset stock declines, I Bonds will only protect their own principal, not your portfolio as a whole. I plan to consider them as part of my emergency fund and/or mini-pseudo-liability-matching to protect against unexpected inflation in early retirement.
I think this is a smart way to think of them.

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Re: “Beating” the market with i bonds

Post by JoMoney » Sat Oct 12, 2019 10:55 am

eleventhstreet wrote:
Wed Sep 11, 2019 11:09 am
So the efficient market hypothesis explains why your typical investor cannot outperform and should stick to passive

Wouldn’t ibonds be the exception to this rule for two reasons
1. The limited number of bonds issued gives an inherent advantage to the retail investor as it is issued in only limited numbers and only to individuals
2. The interest rate is set semiannually and the seller is “forced” to keep that rate which allows buyers to engage in what is essentially arbitrage.
When the current rate was announced in May it was similar to the tips rate. Now the tips rate has plunged and Ibonds haven’t yet


Could anyone here argue why, aside from simplicity with multiple accounts, how passive investing can match an ibond for a individuals taxable account. Aside from the 1 year lockout this would run circles around say vanguards tips index fund vaipx when you consider the no expenses and the superior rate offered at this time via ibonds

I would go as far as to say with the inverted yield curve, ibonds represent one of the few government “freebies” like Roth IRA that everyone who can should max out if it does not mess up their a.a.
While EMH may lead an investor to passive investing, the argument for passive investing does not rely on EMH.
Passive investing does not mean one has to buy broad-market funds or even index funds. You can passively hold a portfolio of individual securities. You can buy ibonds for your entire bond portfolio and be a passive investor.
People poke holes in the idea of the market being "Efficient" all the time... Even worse than denying that pricing opportunities sometimes exist, EMH deludes people into believing risk is always being priced fairly.
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Re: “Beating” the market with i bonds

Post by smectym » Sat Oct 12, 2019 11:03 am

Jack FFR1846 wrote:
Wed Sep 11, 2019 1:03 pm
Whakamole wrote:
Wed Sep 11, 2019 11:44 am
I wish I bought more back when the fixed rate was higher and you could buy them with a credit card and get miles/cash back - those were the days.
I wish those opportunities were still here. On top of the credit card payments, they could be redeemed back then in 6 months, instead of a year today and each person could buy $30k worth. And they actually didn't keep track of that (I bought more by mistake one year). Our family of 4 bought $120k a year for 3 or 4 years, selling bonds bought earlier in the year to pay for new ones. Back then, we vacationed in Aruba and would be able to upgrade to 1st class with the miles we got doing this.

We were able to keep some bonds along the way. Today, we have $370k worth in paper bonds.
I agree there, there was a now-lost “golden age,” that I caught the tail end of, during which the government actually promoted I bonds, the guaranteed fixed rates were higher, the purchase limits were more generous, and paper bonds were the norm. The credit card rewards strategy was icing on the cake. Ou sont les neiges d’autrefois?

Because we loaded up back then, savings bonds still constitute a large core of our risk-free assets. But we haven’t bought new in many years, and I understand those who say that there are too many caveats and roadblocks to make I bonds all that interesting now.

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Re: “Beating” the market with i bonds

Post by bligh » Sat Oct 12, 2019 11:36 am

bhsince87 wrote:
Wed Sep 11, 2019 4:09 pm
eleventhstreet wrote:
Wed Sep 11, 2019 2:44 pm
Okay and here is the last point is I bonds I never see mentioned:

Your TIPs can lose value if inflation stays steady but interest rates rise (I know not likely the two are very closely correlateD)
Imagine you get your tips at 1% with an inflation rate of 2 and then suddenly the inflation rate is still 2 but they're selling tips at 2%. Sure, you can sell on the secondary market before maturity but you're not getting face value. With I bonds, you can sell. So if I buy now and interest rates rise Im dumping those bonds.


Edit: I just realized the downside counter-argument is that I bonds cannot be sold on the secondary market. So if I do end up with some sweet 0.5% fixed rate I bonds when its 2031 and interest rates are now -10%, I wont be able to sell them for their true value
I was going to point this out, but am happy to see you came to the conclusion on your own!

This is pretty much what happened in the last few years. So some folks here cashed in their older I-bonds, but then had to worry about the tax hit.
I totally see this argument if you have an intention to sell these I Bonds in a short while. But if you are fine holding these guys to maturity, I would think holding a 0.5% yielding instrument in a -10% yield world would be amazing and it would be the last thing I'd want to sell. Sure if you are in a situation where you need the money, and I Bonds are all you hold, it would be an issue. But with the $10K annual cap I Bonds can only ever make up so much of your portfolio. If we do enter a -10% yield world I have plenty of regular bond funds and stock funds I could sell in the event I need cash. Mean while I'd be happy I have an instrument storing my wealth and earning me a tax deferred 0.5% yield.

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Re: “Beating” the market with i bonds

Post by Clever_Username » Sat Oct 12, 2019 1:02 pm

Whakamole wrote:
Wed Sep 11, 2019 11:44 am

All that being said, I still like them. Even as a single person, I can get an additional $25K/year in tax-deferred space, and they can be used for an emergency fund after a year.
As a single person who thinks his limit is $10k/year in these, how do I get the other $15K worth?
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Re: “Beating” the market with i bonds

Post by Mel Lindauer » Sat Oct 12, 2019 1:08 pm

Clever_Username wrote:
Sat Oct 12, 2019 1:02 pm
Whakamole wrote:
Wed Sep 11, 2019 11:44 am

All that being said, I still like them. Even as a single person, I can get an additional $25K/year in tax-deferred space, and they can be used for an emergency fund after a year.
As a single person who thinks his limit is $10k/year in these, how do I get the other $15K worth?
You can get another $10k in a trust and $5k in your tax refund.
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Re: “Beating” the market with i bonds

Post by Clever_Username » Sat Oct 12, 2019 1:09 pm

Mel Lindauer wrote:
Sat Oct 12, 2019 1:08 pm
Clever_Username wrote:
Sat Oct 12, 2019 1:02 pm
Whakamole wrote:
Wed Sep 11, 2019 11:44 am

All that being said, I still like them. Even as a single person, I can get an additional $25K/year in tax-deferred space, and they can be used for an emergency fund after a year.
As a single person who thinks his limit is $10k/year in these, how do I get the other $15K worth?
You can get another $10k in a trust and $5k in your tax refund.
Aaah! Thank you. I should have known the tax refund rule. The trust is new information for me. In both cases, though, thank you!
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Re: “Beating” the market with i bonds

Post by lazyday » Sun Oct 13, 2019 8:55 am

dyangu wrote:
Sat Oct 12, 2019 10:31 am
With current rates, I assume the consensus is to max out Ibonds before Nov new rates?
That's what I'm doing.

See viewtopic.php?f=1&t=270462&p=4791319#p4791319

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Re: “Beating” the market with i bonds

Post by JBTX » Sun Oct 13, 2019 8:02 pm

eleventhstreet wrote:
Wed Sep 11, 2019 11:09 am
So the efficient market hypothesis explains why your typical investor cannot outperform and should stick to passive

Wouldn’t ibonds be the exception to this rule for two reasons
1. The limited number of bonds issued gives an inherent advantage to the retail investor as it is issued in only limited numbers and only to individuals
2. The interest rate is set semiannually and the seller is “forced” to keep that rate which allows buyers to engage in what is essentially arbitrage.
When the current rate was announced in May it was similar to the tips rate. Now the tips rate has plunged and Ibonds haven’t yet


Could anyone here argue why, aside from simplicity with multiple accounts, how passive investing can match an ibond for a individuals taxable account. Aside from the 1 year lockout this would run circles around say vanguards tips index fund vaipx when you consider the no expenses and the superior rate offered at this time via ibonds

I would go as far as to say with the inverted yield curve, ibonds represent one of the few government “freebies” like Roth IRA that everyone who can should max out if it does not mess up their a.a.
To an extent, ibonds are a govt subsidized "freebie" to small investors. If rates drop, you are locked. If rates go up, you can sell them. This is likely why purchases are capped. If there were no cap then you roll them over if the rate increases, and you are locked in if rates go down.

Also, there are times, when overall interest rates are really low and short term rates near zero that ibonds yielding inflation may beat most other short term "riskless" investments.

Having said all that the benefits are modest given the purchase caps and modest penalties for selling before 5 years.

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Re: “Beating” the market with i bonds

Post by grabiner » Mon Oct 14, 2019 8:39 am

eleventhstreet wrote:
Wed Sep 11, 2019 11:09 am
So the efficient market hypothesis explains why your typical investor cannot outperform and should stick to passive

Wouldn’t ibonds be the exception to this rule for two reasons
1. The limited number of bonds issued gives an inherent advantage to the retail investor as it is issued in only limited numbers and only to individuals
2. The interest rate is set semiannually and the seller is “forced” to keep that rate which allows buyers to engage in what is essentially arbitrage.
When the current rate was announced in May it was similar to the tips rate. Now the tips rate has plunged and Ibonds haven’t yet
This is one of many situations in which the efficient market hypothesis does not apply, because transactions are not in the market or have a benefit not captured by the market. Other examples of non-market transactions include buying stable-value funds in a 401(k), making extra payments on a loan, and tax loss harvesting,
Wiki David Grabiner

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2pedals
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Re: “Beating” the market with i bonds

Post by 2pedals » Mon Oct 14, 2019 9:08 am

I don't care for I bonds or EE bonds in my stage of life. Inherited savings bonds tend to be complicated when working through treasury direct. After death, I don't want to an leave extra accounts and complicated things to worry my dear wife or dear daughter.

cochlearboy
Posts: 49
Joined: Sun Jul 07, 2019 12:11 pm

Re: “Beating” the market with i bonds

Post by cochlearboy » Mon Oct 14, 2019 9:21 am

eleventhstreet wrote:
Wed Sep 11, 2019 2:44 pm
Edit: I just realized the downside counter-argument is that I bonds cannot be sold on the secondary market. So if I do end up with some sweet 0.5% fixed rate I bonds when its 2031 and interest rates are now -10%, I wont be able to sell them for their true value
I am curious - how likely do you think the scenario of -10% will occur?

Do you think negative interest rates are a real possibility in the US within the next 30-40 years? I wish I had a crystal ball here...

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