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Re: Confused about I-Bond rates
Old 05-02-2006, 06:47 AM   #41
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Re: Confused about I-Bond rates

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Originally Posted by HaHa

Brewer, thanks for the explanation. I couldn't find my Excel Functions book, so I ignored the amortization of the discount and just dealt with current yield. I can see now that the amortization is meaningful.

Ha
I realized that I actually forgot another source of extra yield in my explanation, specifically the leverage on CPI. *Assuming the bonds are trading at 22.50, they pay CPI plus the spread on the whole par amount. *That means that in addition to the extra 23BP from the spread over CPI, you also get 25/22.50 times CPI on the base aomount. *IOW, the bonds actually yield 1.11X CPI plus 3.26%. *That extra .11 times CPI is naturally tough to calculate, since CPI will flop around and we have no way of knowing what it will be in the future, but if CPI averages 3% (well within historical range), we are talking about another 33BP of yield.
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Re: Confused about I-Bond rates
Old 05-02-2006, 07:32 AM   #42
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Re: Confused about I-Bond rates

I got lucky and bought some I bonds in 1999 when the stock market was booming.
Current rate of those bonds is 9.2%
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Re: Confused about I-Bond rates
Old 05-03-2006, 12:00 AM   #43
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Re: Confused about I-Bond rates

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Originally Posted by Cut-Throat

Update:

Yup, you were correct! - I got an e-mail from them and I will continue to receive the 6.73% for another 3 months. I'll dump them in August!
Great! Glad to hear your good news...
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Re: Confused about I-Bond rates
Old 05-05-2006, 10:59 AM   #44
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Re: Confused about I-Bond rates

I'm sorry.* It's my fault.* I am responsible.

A couple months ago I bought an I Bond for the first time.* 1% fixed part of rate.* The semiannual inflation adjustment was high.
Now, for new I Bond issues, the fixed part moved up to 1.4%.* And the semiannual inflation adjustment for all has dropped waaaaay down to .5%.

I think I have a reverse Midas touch on TIPS bond funds and I Bond!

I wondered how the inflation adjustment could drop like a rock like that.* Doesn't seem to fit my observations!
So I looked @ bls.gov at CPI-U.* Inflation went NEGATIVE for Nov. and Dec.* Then in January it went positive again.* So for the 6 months, inflation dug a hole first, then climbed out of it.* So that lowered the overall by quite a bit.* Still doesn't make me feel any better.

The last time I looked, about a month ago, the Vanguard TIPS fund I purchased in May of 03 has had an overall 9.1% rate of return for the period.* Not % per year, that's ~3 years total!* In retrospect, I would have been better off with CD's!
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Re: Confused about I-Bond rates
Old 05-05-2006, 12:51 PM   #45
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Re: Confused about I-Bond rates

I just stopped my ibond orders. Not like it was much, just $100 a month for the last three years. I just expected to keep accumulating them for a few more years. But now I figure I can do just as well with these funds elsewhere, I will probably buy some dividend paying stocks instead.
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Re: Confused about I-Bond rates
Old 05-08-2006, 10:29 AM   #46
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Re: Confused about I-Bond rates

Very confusing, as it depends on when the bonds were purchased, (month & year) as to the interest they are
earning and when it will fall to the new May 1st lower rates. Still confused about when to cash these bad boys in and which 3 months of interest you would lose.
Anyone know the answer to this: If you have bonds that were purchased May of 2003 (they are now earning 2.11%, and bonds purchased Nov. 2004 (they are now earning 2.01%. If cashed in today , do I lose the past 3-months interest (a much higher rate) or better to wait 3 months( til Sept 1) then sell and lose the last 3-months at the 2% range. Am I looking at this right??
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Re: Confused about I-Bond rates
Old 05-08-2006, 12:04 PM   #47
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Re: Confused about I-Bond rates

wait three months so it is the 3 months at 2ish% that you forfeit
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Re: Confused about I-Bond rates
Old 05-08-2006, 01:29 PM   #48
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Re: Confused about I-Bond rates

I bought one $5,000 I-bond back in early August, 2005. I was going to buy another one this year, but a little voice in my head told me not to. It was the same little voice that told me NOT to buy the motorhome I was thinking about getting back in October 2000, when my investments were at a then-all-time high and I thought the prosperity would go on forever. Considering what the economy, and my investments, did soon thereafter, plus with me finally getting fed up and quitting my second job, I guess it's a good thing I listen to that little voice sometimes.
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Re: Confused about I-Bond rates
Old 05-08-2006, 02:07 PM   #49
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Re: Confused about I-Bond rates

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I guess it's a good thing I listen to that little voice sometimes.
And what does your little voice say about interest rates, real estate, GDP and the like?
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Re: Confused about I-Bond rates
Old 05-08-2006, 02:55 PM   #50
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Re: Confused about I-Bond rates

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Originally Posted by yakers
And what does your little voice say about interest rates, real estate, GDP and the like?
Umm... "Danny's not here right now, Mrs. Torrance?"
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