Author Topic: Series I savings bonds?  (Read 3948 times)

Offline Geoff

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Series I savings bonds?
« on: January 14, 2009, 10:18:25 AM »
Does anyone invest in these?  They are guaranteed to keep ahead of inflation, and will never lose principal.  It seems like this might be a better place to park money for retirement then a 401k.  Plus, if the US Govt defaults on these bonds, we have bigger problems then money to deal with....

I found this site that compares Series I bonds with the Vanguard 500, and it looks like there was only a short period of time where the stock market out performed I Bonds.

http://www.savings-bond-advisor.com/i-bonds-versus-the-stock-market/

What do you guys think about these? 

Offline BigDanInTX

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Re: Series I savings bonds?
« Reply #1 on: January 14, 2009, 10:21:08 AM »
I have a serious issue with anything "guaranteed" by our government right now.  15-20 years ago, sure, I'd have 100% faith.  Today though, no way.  Why?  Because if we go through a collapse of our financial state, we may have $50,000 in savings bonds, but what is its true value?  It's $50,000, but if our dollar has devalued so much, that may only be worth 1 Euro, which is pretty worthless.

I'll stick to something tangible that is recognized throughout the world as "valuable" or useful in a survival scenario for trade.  That is precious metals, firearms, ammunition.
« Last Edit: January 14, 2009, 10:24:44 AM by BigDanInTX »

Offline lonestar

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Re: Series I savings bonds?
« Reply #2 on: January 14, 2009, 11:47:07 AM »
Don't forget food....

Offline Stein

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Re: Series I savings bonds?
« Reply #3 on: January 15, 2009, 09:40:51 AM »
They are a solid tool for inflation protected, but they pay next to nothing right now.  Currently, they are paying 0.7% and have gone to 0% at times in the past, depending on when you buy them.  EE bonds aren't much better at 1.3%.

If I were looking at something like that, I would probably look into CDs.  One could get double that interest, maybe triple with an FDIC insured product - virtually the same level of dependability.

Offline Geoff

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Re: Series I savings bonds?
« Reply #4 on: January 15, 2009, 12:47:22 PM »
Actually, 0.7% is only the fixed interest rate. There is also an inflationary rate, which is currently 4.92%.  I Bonds make the sum of these rates, so currently I Bonds are paying 5.64%.  I've seen I Bonds make close to 7% for certain 6 month periods.

The inflationary rate changes every six month based upon the current Consumer Price Index.  So, the current fixed rate just means that I Bonds make 0.7% more then CPI.

So, if $50k does end up worth only 1 Euro, the CPI will skyrocket, and these bonds seem to protect against this scenario.

I agree that food, guns, and ammo are important investments, but it's kind of hard to retire on.  I am comparing these to investing in a 401k or a regular CD.

Thank you.

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Re: Series I savings bonds?
« Reply #5 on: January 16, 2009, 01:34:10 PM »
The govenrment's Consumer Price Index is a lie.  Real inflation is always higher than what they say.

Explanation of how and why they do it is here:  http://www.shadowstats.com

Earning 0.7% over CPI means you are actually losing about 3% ~ 4% of your money per year.


Offline Stein

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Re: Series I savings bonds?
« Reply #6 on: January 20, 2009, 07:01:08 AM »
Actually, 0.7% is only the fixed interest rate. There is also an inflationary rate, which is currently 4.92%.  I Bonds make the sum of these rates, so currently I Bonds are paying 5.64%.  I've seen I Bonds make close to 7% for certain 6 month periods.

The inflationary rate changes every six month based upon the current Consumer Price Index.  So, the current fixed rate just means that I Bonds make 0.7% more then CPI.

So, if $50k does end up worth only 1 Euro, the CPI will skyrocket, and these bonds seem to protect against this scenario.

I agree that food, guns, and ammo are important investments, but it's kind of hard to retire on.  I am comparing these to investing in a 401k or a regular CD.

Thank you.

You're right, I wasn't thinking straight when I posted.  They are paying 5.64 through April 30.

I will probably do something like this with my Roth IRA contributions this year since I am saving the money for an investment into some type of business in the next 5-10 years.

I can't think of something better in the fixed income arena.