NOV 2022 I-Bond Rate

[Deleted]

6.48%
tipswatch.com/tracking-inflation-and-i-bonds/

[yogibearbull]

My estimate is now updated to 6.47-8.02% based on the new CPI release and an assumption of new fixed/base rate in 0-1.5% range. We will know for sure only on Nov 1.
ybbpersonalfinance.proboards.com/thread/209/savings-bonds-6-months-nov?page=3&scrollTo=803

[Deleted]

I am foreseeing buying more in January.

[Deleted]

Any opinions on whether I-Bonds make sense for 2023?

[mozart522]

Nov 19, 2022 13:12:58 GMT @slooow said:

Any opinions on whether I-Bonds make sense for 2023?

For what use?  If the FED get inflation back to 2%, I-Bonds will only yield about 2% for the next potentially long perion, perhaps 20 years.  I you are buying to hold for a few years, that would be fine, but you might get more by investing is intermediate or long bond funds as rates come down and they their prices rise.

I have some 2% fixed I-bonds I bought in 2002, so I'm very happy I held during the low inflation years.

[yogibearbull]

I was disappointed by the +0.40% fixed/base rate (6.89% total, 11/1/22-4/30/23). I think that 5-yr TIPS (to be held to maturity) with the current real rate of 1.71% make better sense - they will capture the same CPI (LINK).
treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/

[Deleted]

yogibearbull, mozart522,

Thank you both for your opinions. I do think inflation is on the wane and makes them less appealing. YBB - what will you do with the ones you bought?

[FD1000]

Inflation was rising very fast in 2022...and...ETF=TIP, was down -13%.

Below is an article from 05/2022

(www.schwab.com/learn/story/are-tips-worth-considering-now#:~:text=As%20the%20level%20of%20the.)

(www.investopedia.com/articles/investing/102215/3-reasons-stay-away-tips.asp)

I don't invest in funds that I can't be sure about the near to medium future.
Sure, you can buy directly and hold for years.

[habsui]

Nov 19, 2022 14:07:07 GMT @slooow said:

yogibearbull , mozart522 ,

Thank you both for your opinions. I do think inflation is on the wane and makes them less appealing. YBB - what will you do with the ones you bought?

Not YBB -

I bought a few 2yr TIPS some weeks ago. The break even inflation rate is 2.6% relative to 2yr treasuries. I will hold until maturity.  

[roi2020]

David Enna analyzes the advantages/disadvantages of I Bonds vs. TIPS.
He states that I Bonds are better short-term investments while TIPS
are superior longer-term investments at this time.
Link

[Deleted]

Another consideration that no one mentions is how TIPS and I-Bonds differ with regards to estate planning. I'm not real sure about this myself, but believe there is no stepped up cost basis for Savings Bonds upon the owner's passing, taxes are due on the accrued interest. Interest can still be deferred if there is a co-owner listed. TIPS would get a stepped up basis upon an owner's passing, I think, and since the inflation adjustment for TIPS gets incorporated into the price, that could be valuable.

[Deleted]

Nov 21, 2022 15:37:37 GMT @django said:

Another consideration that no one mentions is how TIPS and I-Bonds differ with regards to estate planning. I'm not real sure about this myself, but believe there is no stepped up cost basis for Savings Bonds upon the owner's passing, taxes are due on the accrued interest. Interest can still be deferred if there is a co-owner listed. TIPS would get a stepped up basis upon an owner's passing, I think, and since the inflation adjustment for TIPS gets incorporated into the price, that could be valuable.

If individual TIPS are held as recommended in a non-taxable account, stepped up basis does not apply.

[Deleted]

Nov 21, 2022 15:53:37 GMT @haven said:

Nov 21, 2022 15:37:37 GMT @django said:

Another consideration that no one mentions is how TIPS and I-Bonds differ with regards to estate planning. I'm not real sure about this myself, but believe there is no stepped up cost basis for Savings Bonds upon the owner's passing, taxes are due on the accrued interest. Interest can still be deferred if there is a co-owner listed. TIPS would get a stepped up basis upon an owner's passing, I think, and since the inflation adjustment for TIPS gets incorporated into the price, that could be valuable.

If individual TIPS are held as recommended in a non-taxable account, stepped up basis does not apply.

That recommendation is based on tax planning, not estate planning. As I mentioned, I have never read any comparisons for people like myself, well into retirement and in a low tax bracket. It could make sense to favor TIPS in taxable.

[Deleted]

Nov 19, 2022 14:07:07 GMT @slooow said:

yogibearbull , mozart522 ,

Thank you both for your opinions. I do think inflation is on the wane and makes them less appealing. YBB - what will you do with the ones you bought?

I am going to hold a little longer, but not going to add in January.  I still think 6%+ is decent interest in this environment for what is essentially an emergency fund.