I Bonds news and questions

[Brookswood]

For those of you looking for a safe investment that helps fight against the ravages of inflation here’s good news.

Starting on Nov 1 the I Bond fixed rate is going up to 1.3% for bonds bought in the next six months. Add in the inflation adjustment and the annual rate over the six months will be nicely over 5%.
I’ll be buying another I bond in 2024.

Note: you can’t sell an I bond for one year after purchase. And there is a 90 day interest penalty if you sell before you’ve owned the bond for 5 years. The max purchase is $10,000 a year.

 

[Robb.hisself]

For those of you looking for a safe investment that helps fight against the ravages of inflation here’s good news.

Starting on Nov 1 the I Bond fixed rate is going up to 1.3% for bonds bought in the next six months. Add in the inflation adjustment and the annual rate over the six months will be nicely over 5%.
I’ll be buying another I bond in 2024.

Note: you can’t sell an I bond for one year after purchase. And there is a 90 day interest penalty if you sell before you’ve owned the bond for 5 years. The max purchase is $10,000 a year.

While it is a safe bet and maintains the value of your money, it does not offer any real growth. I suppose it can play a role in your investments. But, you want something that will grow and appreciate over time as well.

 

[Brookswood]

While it is a safe bet and maintains the value of your money, it does not offer any real growth. I suppose it can play a role in your investments. But, you want something that will grow and appreciate over time as well.

Very true. I bonds need to be part of a good diversification plan. I keep my emergency money in I bonds. I can cash them in quickly if i need them, and they still will (more or less) keep up with inflation. With a 30 years maturity date, I can let them ride or cash them in as I see fit. But, i certainly would not bet my financial future entirely on I bonds.

 

[Robb.hisself]

Very true. I bonds need to be part of a good diversification plan. I keep my emergency money in I bonds. I can cash them in quickly if i need them, and they still will (more or less) keep up with inflation. With a 30 years maturity date, I can let them ride or cash them in as I see fit. But, i certainly would not bet my financial future entirely on I bonds.

Are I bond interest non taxable for State income tax? Do you know if savings bonds are non taxable as well? Friends of mine invested in savings bonds way back in 1991 at 3.5%. Really not bad since interest rates were far below that for much of this century so far. I thought they were crazy to tie up money at that rate, but it paid off in the long run. Not even I bonds paid that well for a long time. They redeemed them back in 2021

 

[Sippican]

Like any investment cycle, there are advantages to different vehicles.
Equities/stocks have their time and place, but, its not right now. A good investment strategy is one that moves with the tides.
Right now, cash (MM/CD's/fixed annuities) are the place people are storing cash. And why not?
If you want short term gains (3,6,9,12,18 months) then CD's can give you a comfortable 5.50% for the term of the CD, many can even pay you monthly on the interest.

If you want to lock in longer term gains (thinking we are at the top of interest rate hikes) then term fixed annuities such as 6-7 year, fixed 6.20% are available. No risk to capital, only monthly interest checks coming in for the next 7 years.
Now, you can say stocks have done well over time, and they have, and someday they may again, but at this time, right now, stocks are overpriced, the economy is still in jeopardy, the deficit is far above anything we could pay back in a reasonable amount of time, and recession is still being talked about.
Sure, investment managers want you to stay fully in the markets, how else do they make money? So there is a bias on the part of investment managers. They don't want to see you in cash. They make nothing off of that. But, they do make money when your stocks go up AND they money as your stocks go down. Its a win-win for them.

In an equities cycle, I look for dividend paying stocks in the 4-5% range. This provides a nice investment income in retirement. The downside, your initial investment is susceptible to gains and losses. Many say the stock market is still over priced and could use a correction. So although you could get dividend income, I don't want to risk the down share price.

So, I find my 5.50-6.20% returns in CD's/MM/and fixed annuities, while protecting the initial capital. Its a win-win.
Now, will there be a good time to get back into stocks, sure, someday, but today isn't the day.

You want cash flow? create a CD ladder (each maturing in 3,6,9,12,18 months).