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OK, March 2011 CPI-U is posted!!!

And according to my calculations if fixed part is still 0% for I-Bonds on May 1, 2011  then rate will be 4.6% !!!!!


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Guess I've been splitting my contributions for nothing. Thanks for the info.

HKnight (Sep. 17, 2014 @ 9:23p) |

When are this I series Bonds cashable if no longer interested in them.

Olivia

mosleyolivia (Sep. 22, 2014 @ 5:44p) |

Bonds cannot be cashed earlier than 1 year after issuance. You lose three months interest if cashed in less than five y... (more)

fedguy (Sep. 22, 2014 @ 6:20p) |

MAY 2014 rate (I + F components): 1.94% annualized rate earned for 6 months on bonds purchased May 1, 2014 to Oct 31, 2014

NOV 2013 rate (I + F components): 1.38% annualized rate earned for 6 months on bonds purchased Nov 1, 2013 to Apr 30, 2014

MAY 2013 rate (I component only): 1.18% annualized rate earned for 6 months on bonds purchased May 1, 2013 to Oct 31, 2013

NOV 2012 rate (I component only): 1.76% annualized rate earned for 6 months on bonds purchased Nov 1, 2012 to April 30, 2013

MAY 2012 rate (I component only): 2.2% annualized rate earned for 6 months on bonds purchased May 1, 2012 to Oct 31, 2012

NOV 2011 rate (I component only): 3.06% annualized rate earned for 6 months on bonds purchased Nov 1, 2011 to Apr 30, 2012

MAY 2011 rate (I component only): 4.6% earned on bonds purchased May 1, 2011 to Oct 31, 2011

The interest rate your I-Bond earns changes every 6 months. A new interest rate is announced every MAY and NOV but will not be applied to your bond until its semiannual anniversary months. Therefore:

A JAN bond will adjust every JAN (to preceding NOV rate) and every JUL (to MAY rate)
A FEB bond will adjust every FEB (to preceding NOV rate) and every AUG (to MAY rate)
A MAR bond will adjust every MAR (to preceding NOV rate) and every SEP (to MAY rate)
A APR bond will adjust every APR (to preceding NOV rate) and every OCT (to MAY rate)
A MAY bond will adjust every MAY (to announced MAY rate) and every NOV (to NOV rate)
A JUN bond will adjust every JUN (to preceding MAY rate) and every DEC (to NOV rate)
A JUL bond will adjust every JUL (to preceding MAY rate) and every JAN (to NOV rate)
A AUG bond will adjust every AUG (to preceding MAY rate) and every FEB (to NOV rate)
A SEP bond will adjust every SEP (to preceding MAY rate) and every MAR (to NOV rate)
A OCT bond will adjust every OCT (to preceding MAY rate) and every APR (to NOV rate)
A NOV bond will adjust every NOV (to announced NOV rate) and every MAY (to MAY rate)
A DEC bond will adjust every DEC (to preceding NOV rate) and every JUN (to MAY rate)

What are I and F components?  The I component is in the inflation rate, which changes every May and Nov.  The F component is the fixed rate, which is determined when you purchase your bond and is earned for its entire 30 year life.

Fixed rates (F component):

May 1, 2014 - Oct 31, 2014: 0.1%
Nov 1, 2013 - Apr 30, 2014: 0.2%
Nov 1, 2010 - Oct 31, 2013: 0.0%

#Cruncher on the bogleheads forum has made this: http://eyebonds.info/ibonds/   

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The topic you are trying to view does not exist

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There can never be a negative rate, and I'm sure Treasury isn't going to provide a fixed rate now for the bonds. It makes those people who backed the truck up 10 years ago, and bought their I-Bonds with credit cards, that much smarter.

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calwatch said:   .... It makes those people who backed the truck up 10 years ago, and bought their I-Bonds with credit cards, that much smarter.

Highest fixed rate was 3.6% in May 2000.
Those bonds will be earning more then 8% for next six month
Congrats to smart people who have them !!!

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noob here (on i-Bonds). if I buy $5000 worth of i-Bonds from TressuryDirect before May 1st, will I be getting the 4.6% from May 2011?

I understand loosing 3 months interest if I sell before 5 years.

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no, first 6 month you will be getting 0.74% (current rate that in effect on your date of purchase) becasue date of the bond is before May 1. Next 6 months will be 4.6%
If you buy May 1- you will start with 4.6% for six month but rate after that is unknown.

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MoneyOCD said:   calwatch said:   .... It makes those people who backed the truck up 10 years ago, and bought their I-Bonds with credit cards, that much smarter.

Highest fixed rate was 3.6% in May 2000.
Those bonds will be earning more then 8% for next six month
Congrats to smart people who have them !!!


Sorry to rain on your parade but I think the individuals holding these instruments will ultimately regret it... the CPI numbers are cooked with things like hedonic adjustment, substitution of goods (no longer a fixed basket of items), seasonal adjustment, excluding food and energy, etc. The inflation rate would be something like 10% if it was recorded like it used to be.

In effect, holders of I-bonds will be losing purchasing power overall since the real inflation rate is higher than the CPI index used to determine their return on investment. Hardly a reason to celebrate.

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MoneyOCD said:   no, first 6 month you will be getting 0.74% (current rate that in effect on your date of purchase) becasue date of the bond is before May 1. Next 6 months will be 4.6%
If you buy May 1- you will start with 4.6% for six month but rate after that is unknown.


Assuming worst possible case is it goes to 0%, you can hold for 6 months more then sell for effective APY of around 2.3%.

Edit: corrected hold time to 12 months, minimum.

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MoneyOCD said:   Continue on this topic : link

OK, March CPI-U is posted!!!

And according to my calculations if fixed part is still 0% for I-Bonds on May 1 then rate will be 4.6% !!!!!




I always suck at calculating this -- for those of us who want to capitalize on the 4.6% rate, should we buy at end of April or end of May?

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bigmarley4 said:   
I always suck at calculating this -- for those of us who want to capitalize on the 4.6% rate, should we buy at end of April or end of May?


End of May is the best (but can buy starting May 1)

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talljay said:   MoneyOCD said:   no, first 6 month you will be getting 0.74% (current rate that in effect on your date of purchase) becasue date of the bond is before May 1. Next 6 months will be 4.6%
If you buy May 1- you will start with 4.6% for six month but rate after that is unknown.


Assuming worst possible case is it goes to 0%, you can hold for 3 months more then sell for effective APY of around 3%.


The minimum holding period for I-bonds is 12 months.

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Will be in for 5k in May

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Are iBonds made by Apple?

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qcumber98 said:   Are iBonds made by Apple?
Of course they are!

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MoneyOCD said:   no, first 6 month you will be getting 0.74% (current rate that in effect on your date of purchase) becasue date of the bond is before May 1. Next 6 months will be 4.6%
If you buy May 1- you will start with 4.6% for six month but rate after that is unknown.



Is it like this?

I thought you will get 0.74% till May1 but after that it will be current fixed + May's variable and as per this thread 4.6% is variable part not the fixed part.

But it will be better to wait till May1 (which is just round the corner) and see if fixed rate also get bump (highly unlikely) or at least you will know if 4.6% figure is correct.

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The rate on the bond you purchase adjusts every 6 months from the month of purchase. Something bought in April gets last year's November rate for 6 months, then this year's May rate for the following 6 months, etc.

If you intend to hold the bond for only a little while and think the rate in November (2011) will be higher than the current 0.74%, you'd be better off waiting 'til end of May to make the purchase.

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brettdoyle said:   MoneyOCD said:   calwatch said:   .... It makes those people who backed the truck up 10 years ago, and bought their I-Bonds with credit cards, that much smarter.

Highest fixed rate was 3.6% in May 2000.
Those bonds will be earning more then 8% for next six month
Congrats to smart people who have them !!!


Sorry to rain on your parade but I think the individuals holding these instruments will ultimately regret it... the CPI numbers are cooked with things like hedonic adjustment, substitution of goods (no longer a fixed basket of items), seasonal adjustment, excluding food and energy, etc. The inflation rate would be something like 10% if it was recorded like it used to be.

In effect, holders of I-bonds will be losing purchasing power overall since the real inflation rate is higher than the CPI index used to determine their return on investment. Hardly a reason to celebrate.


Its amazing that you speak the truth and you get red for it. You ought to be commended by knowing the farse that eceonomic data is. They on the other hand, will ultimately be left holding the bag with their "great rates".

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brettdoyle said:   MoneyOCD said:   calwatch said:   .... It makes those people who backed the truck up 10 years ago, and bought their I-Bonds with credit cards, that much smarter.

Highest fixed rate was 3.6% in May 2000.
Those bonds will be earning more then 8% for next six month
Congrats to smart people who have them !!!


Sorry to rain on your parade but I think the individuals holding these instruments will ultimately regret it... the CPI numbers are cooked with things like hedonic adjustment, substitution of goods (no longer a fixed basket of items), seasonal adjustment, excluding food and energy, etc. The inflation rate would be something like 10% if it was recorded like it used to be.

In effect, holders of I-bonds will be losing purchasing power overall since the real inflation rate is higher than the CPI index used to determine their return on investment. Hardly a reason to celebrate.
Yes, because that 8% is losing purchasing power much faster than cash in a savings account at 1.2%, or even 4%...

So the rate is based on manipulated data, who cares? It's still a much better return relative to other risk-free options.

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Perfect timing!!

Thanks OP, the only regret is to try and log on to their site -- they take security way to serious and the process to log on to an account is fairly ridiculous IMO.

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Wouldn't the better play be to wait another 6 months and see what the CPI-U numbers look like towards the end of the May-Oct cycle? If the CPI numbers are high enough, you can buy in Oct to lock in the 4.6% rate for your first 6 months, plus you'll know exactly what the 2nd 6 month rate will be because you'd be buying with the Oct fixed rate, and have all the CPI numbers in that determine the Nov-Apr variable rate.

At that time, you can calculate the return for the next 12 months, tack on another 3 months to absorb the sell before 5 years penalty, and figure out the effective rate of return for 15 months (really 14 months + a few days if timed right).

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qcumber98 said:   Are iBonds made by Apple?

Jobs is what it's about..

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might be a dumb question, but would it make sense to pull 5k out of a 3% rewards checking account to buy ibonds in may?

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3% vs 4.6%......I would, in fact; I am!

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Just keep in mind the 4.6% annualized rate is only paid over 6 months---and you must hold an I-bond for 12 months, and you will pay a 3-month interest penalty (of as-of-yet undetermined rate) if you cash out before 5 years.

So don't simply compare your current RCA rate to 4.6% and make a hasty retreat.

You can wait til Halloween and still get the 4.6%. By then we'll have a much better picture of the Durbin Amendment's impact on RCA rates.

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EL3V3N said:   brettdoyle said:   MoneyOCD said:   calwatch said:   .... It makes those people who backed the truck up 10 years ago, and bought their I-Bonds with credit cards, that much smarter.

Highest fixed rate was 3.6% in May 2000.
Those bonds will be earning more then 8% for next six month
Congrats to smart people who have them !!!


Sorry to rain on your parade but I think the individuals holding these instruments will ultimately regret it... the CPI numbers are cooked with things like hedonic adjustment, substitution of goods (no longer a fixed basket of items), seasonal adjustment, excluding food and energy, etc. The inflation rate would be something like 10% if it was recorded like it used to be.

In effect, holders of I-bonds will be losing purchasing power overall since the real inflation rate is higher than the CPI index used to determine their return on investment. Hardly a reason to celebrate.


Its amazing that you speak the truth and you get red for it. You ought to be commended by knowing the farse that eceonomic data is. They on the other hand, will ultimately be left holding the bag with their "great rates".

He does deserves some red because part of his statement passed as facts are simply wrong. For example, food and energy isn't excluded from the cpi used in ibond (or ss cola adjustments). Not to mention the 10% number is just something he pulled out of thin air.

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I wonder if BofA would let me buy one of these for $5k in coins

if so, the credit card deal to buy I-bonds is still alive and well!

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dugggg said:   Just keep in mind the 4.6% annualized rate is only paid over 6 months---and you must hold an I-bond for 12 months, and you will pay a 3-month interest penalty (of as-of-yet undetermined rate) if you cash out before 5 years.

So don't simply compare your current RCA rate to 4.6% and make a hasty retreat.

You can wait til Halloween and still get the 4.6%. By then we'll have a much better picture of the Durbin Amendment's impact on RCA rates.


tax deferred and state tax exempt plays a role here too

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Mithrin said:   Wouldn't the better play be to wait another 6 months and see what the CPI-U numbers look like towards the end of the May-Oct cycle? If the CPI numbers are high enough, you can buy in Oct to lock in the 4.6% rate for your first 6 months, plus you'll know exactly what the 2nd 6 month rate will be because you'd be buying with the Oct fixed rate, and have all the CPI numbers in that determine the Nov-Apr variable rate.

At that time, you can calculate the return for the next 12 months, tack on another 3 months to absorb the sell before 5 years penalty, and figure out the effective rate of return for 15 months (really 14 months + a few days if timed right).


No, it will not be a better play. It does not matter what the rate is for the 2nd 6 month rate. You HAVE to hold it for that period.

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Only 5K purchase per calendar year sucks.

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I've never understood the 5k limit myself. If the gov't REALLY wants help with the deficit, raise the maximum to 250k or so. Plenty of people would get these instead of the current ~1% in a bank account...

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Cheapoking said:   Only 5K purchase per calendar year sucks.

10K limit.

5 paper, 5 TD

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stormdog123 said:   Mithrin said:   Wouldn't the better play be to wait another 6 months and see what the CPI-U numbers look like towards the end of the May-Oct cycle? If the CPI numbers are high enough, you can buy in Oct to lock in the 4.6% rate for your first 6 months, plus you'll know exactly what the 2nd 6 month rate will be because you'd be buying with the Oct fixed rate, and have all the CPI numbers in that determine the Nov-Apr variable rate.

At that time, you can calculate the return for the next 12 months, tack on another 3 months to absorb the sell before 5 years penalty, and figure out the effective rate of return for 15 months (really 14 months + a few days if timed right).


No, it will not be a better play. It does not matter what the rate is for the 2nd 6 month rate. You HAVE to hold it for that period.


Yes, but in 6 months, you will know what the 2nd 6 month rate is going to be and can make a more informed decision as to whether the 4.6% for 6 months is worth holding the iBond through the next 6 months.

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capcdoc said:   I've never understood the 5k limit myself. If the gov't REALLY wants help with the deficit, raise the maximum to 250k or so. Plenty of people would get these instead of the current ~1% in a bank account...How would this help the deficit? It'd merely finance it, which hasnt been a problem thusfar.

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Mithrin said:   stormdog123 said:   Mithrin said:   Wouldn't the better play be to wait another 6 months and see what the CPI-U numbers look like towards the end of the May-Oct cycle? If the CPI numbers are high enough, you can buy in Oct to lock in the 4.6% rate for your first 6 months, plus you'll know exactly what the 2nd 6 month rate will be because you'd be buying with the Oct fixed rate, and have all the CPI numbers in that determine the Nov-Apr variable rate.

At that time, you can calculate the return for the next 12 months, tack on another 3 months to absorb the sell before 5 years penalty, and figure out the effective rate of return for 15 months (really 14 months + a few days if timed right).


No, it will not be a better play. It does not matter what the rate is for the 2nd 6 month rate. You HAVE to hold it for that period.


Yes, but in 6 months, you will know what the 2nd 6 month rate is going to be and can make a more informed decision as to whether the 4.6% for 6 months is worth holding the iBond through the next 6 months.
It's better from the perspective of knowing what you'll be getting.

But in order to get to that point, you also have to forgo the 4.6% for the next ~5 months, presumably earning a much lower rate until then. That rate has to be factored in; whether you buy now or in 5 months, the timeframe you're comparing starts now.

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The buy-now-or-wait issue really hinges on two things.

One, will RCA rates continue to trend downward over the next six months---as they have the past three years---or have they finally reached a plateau in the 2.5-3% range?

This range is critical, because if you buy I-Bonds before May 1, you're looking at only ~2.3% APR at most, by my reckoning.

But the real $10,000 question is, was this six-month highly inflationary spike just a flash in the pan---or is it indicative of a longer trend?

Well, since we're all currently experiencing sharply higher fuel and grocery prices---much higher than 0.74%---I predict waiting to purchase til late October would be the thriftier play.

Edited to fix dumb math error.

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Glitch99 said:   capcdoc said:   I've never understood the 5k limit myself. If the gov't REALLY wants help with the deficit, raise the maximum to 250k or so. Plenty of people would get these instead of the current ~1% in a bank account...How would this help the deficit? It'd merely finance it, which hasnt been a problem thusfar.Lol I was going to say the same thing. This doesn't change the size of the deficit, only who owns it.

But this comment does show how common it is for people to misunderstand government debt. Government debt is a private sector asset. These I-Bonds are assets that we can purchase.

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Glitch99 said:   Yes, because that 8% is losing purchasing power much faster than cash in a savings account at 1.2%, or even 4%...

So the rate is based on manipulated data, who cares? It's still a much better return relative to other risk-free options.
I can't believe you think the USD is risk free... I truly can't believe apparently everyone agrees with you.

This is a sad day for FWF.

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cheezedawg said:   Glitch99 said:   capcdoc said:   I've never understood the 5k limit myself. If the gov't REALLY wants help with the deficit, raise the maximum to 250k or so. Plenty of people would get these instead of the current ~1% in a bank account...How would this help the deficit? It'd merely finance it, which hasnt been a problem thusfar.Lol I was going to say the same thing. This doesn't change the size of the deficit, only who owns it.

But this comment does show how common it is for people to misunderstand government debt. Government debt is a private sector asset. These I-Bonds are assets that we can purchase.


It's better if it's owned domestically, rather than foreign. Thought they might not want to sell too many ibonds as they are likely a losing proposition (subsidized) as compared to the other bonds.

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These might be very naive questions.
1. If I invest in May and get 4.6% for 6 months and 0% for the next six months, then it would still be 2.3% per year? Which I guess it way better than any HYS account.
2. Does it make sense to buy them now vs wait till end of May?

Skipping 1088 Messages...
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Bonds cannot be cashed earlier than 1 year after issuance. You lose three months interest if cashed in less than five years after issuance.

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