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Post by Deleted on Apr 12, 2022 13:32:12 GMT
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Post by mozart522 on Apr 12, 2022 17:37:14 GMT
The biggest issue is only 10K per person so 20K per couple.
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Post by Deleted on Apr 12, 2022 17:46:09 GMT
The annual limit isn't an issue for the majority of Americans. If it is an issue for any one, congratulations on your good fortune and your achievements.
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Post by mozart522 on Apr 12, 2022 20:02:59 GMT
The annual limit isn't an issue for the majority of Americans. If it is an issue for any one, congratulations on your good fortune and your achievements. I mean it is an issue if one wanted to capture the high inflation componant since the fixed rate is 0.0%, and inflation may be back to normal in a year. So you put in 20K and a year later you get maybe $1500 in interest. Basically for me to do that I'd have to take money from my TIRA and pay taxes in my next bracket up, or take it from my roth IRA and give up my tax free compounding. |
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Post by Deleted on Apr 12, 2022 20:21:40 GMT
The annual limit isn't an issue for the majority of Americans. If it is an issue for any one, congratulations on your good fortune and your achievements. It's perhaps a lot to invest year after year, but I imagine many folks participating in the "Who has a lot of cash" poll would love to invest more than the annual limit right now. I recall reading an op-ed in the WSJ urging a higher limit, given the current outlook for inflation and the lack of reasonable fixed income options. |
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Post by Deleted on Apr 12, 2022 20:54:16 GMT
Series I Saving Bonds have been around since 1998 and the limit on purchases didn't start until 2012. I bought my first ones in 1999.
Personally, I'm fine with the limits. It's the only program I'm aware of that gives a chance for lower income folks to have some savings keep up with inflation. People with Richey Rich problems get no sympathy from me.
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Post by Deleted on Apr 12, 2022 21:55:50 GMT
Series I Saving Bonds have been around since 1998 and the limit on purchases didn't start until 2012. I bought my first ones in 1999. Personally, I'm fine with the limits. It's the only program I'm aware of that gives a chance for lower income folks to have some savings keep up with inflation. People with Richey Rich problems get no sympathy from me. I certainly hope lower income folks have been investing in equities, rather than I-bonds. Somebody with a $100,000 60/40 portfolio has $40K (less now) in bond funds and cash. The limit is not just a problem for the 1%. |
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Post by Deleted on Apr 12, 2022 22:27:50 GMT
Savings Bonds outperformed stocks in the first decade of the 21st Century. I have no idea how this decade will end up. Maybe I overreated some to Mozart's post (my apologies to Mozart), but the last time I posted about I-Bonds, the only reply I received was they were worthless because the poster couldn't move half a mil in and out at will. Good grief.
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Post by FD1000 on Apr 13, 2022 20:03:06 GMT
Savings Bonds outperformed stocks in the first decade of the 21st Century. I have no idea how this decade will end up. Maybe I overreated some to Mozart's post (my apologies to Mozart), but the last time I posted about I-Bonds, the only reply I received was they were worthless because the poster couldn't move half a mil in and out at will. Good grief. $10-20K isn't going to cut it. I'm spoiled. I can buy treasuries thru a fund instead of the Gov, I want the same with I-bond. Sure, go ahead and penalize me with 20-30% lower %. So instead of 9+%, give me 7% and I promise to be a good boy and hold for at least a year. |
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Post by Deleted on Apr 13, 2022 22:06:41 GMT
Savings Bonds outperformed stocks in the first decade of the 21st Century. I have no idea how this decade will end up. Maybe I overreated some to Mozart's post (my apologies to Mozart), but the last time I posted about I-Bonds, the only reply I received was they were worthless because the poster couldn't move half a mil in and out at will. Good grief. $10-20K isn't going to cut it. I'm spoiled. I can buy treasuries thru a fund instead of the Gov, I want the same with I-bond. Sure, go ahead and penalize me with 20-30% lower %. So instead of 9+%, give me 7% and I promise to be a good boy and hold for at least a year. I think since you can't lose money on I-Bonds, they provide an advantage that can't be found elsewhere, and they have been around long enough that it has been possible to have achieved a large position even with the limits, if one actually had a long term plan. 7%, 9%, sorry about the bragging but I will be getting 13.02% for ones purchased in the early 2000s...risk free. Go ahead and crap on that! |
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Post by Deleted on Apr 15, 2022 20:57:36 GMT
Series I Saving Bonds have been around since 1998 and the limit on purchases didn't start until 2012. I bought my first ones in 1999. Personally, I'm fine with the limits. It's the only program I'm aware of that gives a chance for lower income folks to have some savings keep up with inflation. People with Richey Rich problems get no sympathy from me. Correction: I-Bonds purchases were never unlimited, they had a $30,000 limit until 2012, and have had a $10,000 limit per taxpayer identification number ever since. Apologies for the mis-information. |
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Post by yogibearbull on Apr 16, 2022 11:55:14 GMT
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Post by mozart522 on Apr 16, 2022 15:42:18 GMT
Savings Bonds outperformed stocks in the first decade of the 21st Century. I have no idea how this decade will end up. Maybe I overreated some to Mozart's post (my apologies to Mozart), but the last time I posted about I-Bonds, the only reply I received was they were worthless because the poster couldn't move half a mil in and out at will. Good grief. No problem @django. I believe much as you do. I bought as much as I could in 2002 and hold them today with a 2% fixed rate. Unfortunately, most of my money was tied up in deferred or tax free programs so I couldn't get what I wanted. Later, I set up an account for my grandkids that would not be taxable for college, and was told after I set it up that it was designed only for parents. Fortunately, they refunded my money and I did something else (529). I personally don't think I-bonds are a good investment today because they have continually kept the fixed rate at 0 or very low rates and inflation, while high now, has not been high for a long time and may not be again. With a 2% fixed rate, I'm almost guaranteed to get 3-4% risk free. I understand you are getting even more. I belive a young person would be better of in EE bonds. Boglehead Mel suggested that one could produce a 40K income per year, buy buying 20K per year starting at 45 and begin to harvest the 40K and 65. This would be like an annuity and is risk free and backed by the government instead of an insurance co. My first post was really just discouraging folks from jumping in now without understanding all the issues. |
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Post by Deleted on Apr 16, 2022 21:25:50 GMT
Mozart, thanks for the further explanation. I was a prolific saver in my working years, mostly because I hated my job and wanted to retire early, and Savings Bonds were one of the few ways to defer taxes in taxable. I wish I would have spent more time learning about income and taxes in retirement. Maybe I would have enjoyed myself a little more when I was younger and healthier.
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Post by yogibearbull on Apr 16, 2022 21:55:42 GMT
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Post by mozart522 on Apr 17, 2022 13:15:39 GMT
Yes, so a couple putting 20K in for 20 years could then harvest 40K taxable income starting with year 21 for the next 20 years. I agree, not appealing to many, but would work for a couple with no pension looking for a guaranteed stream of income on top of SS, and perhaps other. Also would work with just puting in 10K and getting 20K per year after 20 years. The risk free factor in this might appeal to some. |
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Post by yogibearbull on Apr 17, 2022 13:35:25 GMT
Yes, so a couple putting 20K in for 20 years could then harvest 40K taxable income starting with year 21 for the next 20 years. I agree, not appealing to many, but would work for a couple with no pension looking for a guaranteed stream of income on top of SS, and perhaps other. Also would work with just puting in 10K and getting 20K per year after 20 years. The risk free factor in this might appeal to some. , that is OK so long as people know that this is a very special one-time 3.53% deal for the EE-Bonds. Actually, I had this very discussion with Mel at the old M* and his point was that it would work for SOME and we left it at that. For others, I-Bonds are better now. |
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Post by mozart522 on Apr 17, 2022 14:04:48 GMT
Yes, so a couple putting 20K in for 20 years could then harvest 40K taxable income starting with year 21 for the next 20 years. I agree, not appealing to many, but would work for a couple with no pension looking for a guaranteed stream of income on top of SS, and perhaps other. Also would work with just puting in 10K and getting 20K per year after 20 years. The risk free factor in this might appeal to some. , that is OK so long as people know that this is a very special one-time 3.53% deal for the EE-Bonds. Actually, I had this very discussion with Mel at the old M* and his point was that it would work for SOME and we left it at that. For others, I-Bonds are better now. Agree. With I-bonds, you would be betting that either 1) you will get a total of 3.53% or more after 20 years based on a 0 fixed yield (in other words, average inflation at 3.53% or, 2) you want a short term play of x years to capture the current high inflation. Holding I-bonds with 0 fixed rate for 20-30 years might do better than or worse than EE's after 20 years. |
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Post by yogibearbull on Apr 17, 2022 14:18:29 GMT
mozart522 , that is OK so long as people know that this is a very special one-time 3.53% deal for the EE-Bonds. Actually, I had this very discussion with Mel at the old M* and his point was that it would work for SOME and we left it at that. For others, I-Bonds are better now. Agree. With I-bonds, you would be betting that either 1) you will get a total of 3.53% or more after 20 years based on a 0 fixed yield (in other words, average inflation at 3.53% or, 2) you want a short term play of x years to capture the current high inflation. Holding I-bonds with 0 fixed rate for 20-30 years might do better than or worse than EE's after 20 years. Not correct for I-Bonds. First, they don't double in 20 years + 1 (that applies for EE-Bonds only). Second, compounding is with total rate (fixed-rate + inflation-adjustment). A poster at MFO is complaining about his $5K I-Bond bought in 2000 that is now $17.17K (and rates haven't been even been high for them in the past) and he is now worried about taxes - people always worry about something, not having money, having money, etc. www.mutualfundobserver.com/discuss/discussion/comment/148518/#Comment_148518 |
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Post by mozart522 on Apr 17, 2022 15:08:42 GMT
Agree. With I-bonds, you would be betting that either 1) you will get a total of 3.53% or more after 20 years based on a 0 fixed yield (in other words, average inflation at 3.53% or, 2) you want a short term play of x years to capture the current high inflation. Holding I-bonds with 0 fixed rate for 20-30 years might do better than or worse than EE's after 20 years. Not correct for I-Bonds. First, they don't double in 20 years + 1 (that applies for EE-Bonds only). Second, compounding is with total rate (fixed-rate + inflation-adjustment). A poster at MFO is complaining about his $5K I-Bond bought in 2000 that is now $17.17K (and rates haven't been even been high for them in the past) and he is now worried about taxes - people always worry about something, not having money, having money, etc. www.mutualfundobserver.com/discuss/discussion/comment/148518/#Comment_148518I didn't suggest that I-bonds did double in 20 years. I said buying them is betting that they will because EE bonds do. Not sure what you are saying about the fixed rate. It is 0 and has been close to 0 for years, so essentially you are only going to get inflation adjustment if purchased now. |
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Post by Deleted on Apr 17, 2022 15:47:50 GMT
Locking in money for 20 years to earn a return of 3.5% doesn’t seem attractive. Why isn’t investing in I bonds at the current high yields, and then switching to treasury/investment-grade bond funds when the Fed’s done raising rates, a better idea?
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Post by mozart522 on Apr 17, 2022 16:22:16 GMT
Locking in money for 20 years to earn a return of 3.5% doesn’t seem attractive. Why isn’t investing in I bonds at the current high yields, and then switching to treasury/investment-grade bond funds when the Fed’s done raising rates, a better idea? It is for many. My comment was about young person willing to hold for 20 years to build an annuity. This was a comparison to holding I-bonds that long. I bonds are iffy when held long term a low or 0 fixed rate. For example, even though I bought I-bonds in early 2002 with a 2% fixed rate, it took until 9/30/19, or 17 1/2 years to double due to low inflation over that period. I bonds are not designed to we short term vehicles and must be held for a year and at least 5 years without a penalty. People will do it now, but again, how much will you actually make on 10K limit in the next year. And if you have to take it from an IRA, then you either have to pay taxes or if from a Roth, you lose the tax free benefit. |
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Post by yogibearbull on Apr 17, 2022 17:00:00 GMT
mozart522, @skip, hypotheticals go only so far. Here are the results from the Savings Bond Calculator for purchases made in 01/2000, EE-Bond $5,000/2,500 Value now $5,394 EE-Bond $10,000/5,000 Value now $10,788 I-Bonds 5,000/5,000 Value now $17,492 Note that Calculator works for paper bonds and EE-paper bonds used to be sold at half-price (i.e. 1/2 of the face-value). So, lines 2 and 3 are the proper comparison. treasurydirect.gov/BC/SBCPrice
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Post by mozart522 on Apr 17, 2022 18:03:47 GMT
mozart522 , @skip , hypotheticals go only so far. Here are the results from the Savings Bond Calculator for purchases made in 01/2000, EE-Bond $5,000/2,500 Value now $5,394 EE-Bond $10,000/5,000 Value now $10,788 I-Bonds 5,000/5,000 Value now $17,492 Note that Calculator works for paper bonds and EE-paper bonds used to be sold at half-price (i.e. 1/2 of the face-value). So, lines 2 and 3 are the proper comparison. treasurydirect.gov/BC/SBCPrice Well, if you are going to start with a fixed rate of 3.4% you should get a good result. Do you think the government will ever offer 3.4% again (in our lifetimes)? All I've said is that the guarantee of doubling in 20 years may be attractive for some. |
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