I Bond Rate starting in May

[Mulligan]

It doesn't appear you will need to rent a dump trunk to collect your I Bond interest monies for the next 6 month cycle. IBonds will pay 1.18% starting in May provided the fixed component stays at the usual 0% again. Of course, the lucky ones with the 3% fixed, will come out nice again with a 4.18% yield.

[Bikerdude]

Quote:

Originally Posted by Mulligan It doesn't appear you will need to rent a dump trunk to collect your I Bond interest monies for the next 6 month cycle. IBonds will pay 1.18% starting in May provided the fixed component stays at the usual 0% again. Of course, the lucky ones with the 3% fixed, will come out nice again with a 4.18% yield.

I didn't think they updated the rates until 5/1, where did you find the info? If correct they have not changed.

[Mulligan]

Quote:

Originally Posted by Bikerdude I didn't think they updated the rates until 5/1, where did you find the info? If correct they have not changed.

It won't be officially announced until they decide the fixed rate part. Inflation part of interest is calculated through March's CPI which was released today, so the math can be calculated. Although I didn't, the smart people on Bogleheads and Fatheads came up with the same number. You can get 1.76% for the next 6 months if you buy before the end of the month, then you would get the 1.18% following. If they do add a fixed rate other than zero, the rate would be higher. But I would be very surprised if they did, since that amount is still above the 5 year treasury rate. It is just my speculation though.

[Bikerdude]

So if the inflation rate is 1.18 then the composite rate will be 2.36 assuming a 0 fixed rate. Composite rate =[fixed rate + (2 x inflation rate) + (fixed rate x inflation rate)] or 2.36. Or did Bogleheads report the composite rate? Big difference in what you get.

[Mulligan]

Quote:

Originally Posted by Bikerdude So if the inflation rate is 1.18 then the composite rate will be 2.36 assuming a 0 fixed rate. Composite rate =[fixed rate + (2 x inflation rate) + (fixed rate x inflation rate)] or 2.36. Or did Bogleheads report the composite rate? Big difference in what you get.

Biker, I lifted the math from the site, as I don't want to confuse the terminology's. I have just been quoting the bottom line annualized interest rate for the following 6 months.

232.773-231.407) / 231.407 = 0.0059

Annualized (over next 6 months) : 0.0059 * 2 * 100% = 1.18%

[Bikerdude]

Quote:

Originally Posted by Mulligan Biker, I lifted the math from the site, as I don't want to confuse the terminology's. I have just been quoting the bottom line annualized interest rate for the following 6 months. 232.773-231.407) / 231.407 = 0.0059 Annualized (over next 6 months) : 0.0059 * 2 * 100% = 1.18%

Thanks.

[ronocnikral]

ick. I checked this morning and numbers weren't updated (and technically should have been yesterday). Based on Jan's numbers it was looking negative. The rising fuel costs didn't bring it up as much I thought it would. sigh........I find myself reaching for yield more and more.

[Mulligan]

Quote:

Originally Posted by ronocnikral ick. I checked this morning and numbers weren't updated (and technically should have been yesterday). Based on Jan's numbers it was looking negative. The rising fuel costs didn't bring it up as much I thought it would. sigh........I find myself reaching for yield more and more.

Yep, it appears everything is dying on the vine, at least at this moment. I will just take my medicine and stay with the program. At 2% I have an outside chance to be alive in 36 years to see my cash assets double. At 1% it's 72 years. I won't be around for that, no chance. Inflation definitely on the tame side CPI wise anyways. The last 5 IBond interest rate cycles have been in order: 4.6%...3.06%...2.2%...1.76%... And now apparently 1.18%.

[imoldernu]

April Series I Savings Bonds - A Little Better Deal Than 1-Year CDs

IBonds that we bought in February 2001, base rate of 3.40% , doubled in value as of Nov 2012. At that time, the maximum allowed per person was $30K. The ones we bought in later years have lower base rates.
Ibond Savings Wizard from the Treasury gives one click total results.
Not a great return but we'll settle for what we get, and unless they develop some kind of "chained CPI-U" we're hoping to squeeze through if rates go up.
At one point, we were getting over 8%. Currently 6.19%.

[Bikerdude]

Quote:

Originally Posted by imoldernu April Series I Savings Bonds - A Little Better Deal Than 1-Year CDs IBonds that we bought in February 2001, base rate of 3.40% have doubled in value as of February 2013. At that time, the maximum allowed per person was $30K. The ones we bought in later years have lower base rates. Ibond Savings Wizard from the Treasury gives one click total results. Not a great return but we'll settle for what we get, and unless they develop some kind of "chained CPI-U" we're hoping to squeeze through if rates go up. At one point, we were getting over 8%. Currently 6.19%.

Correct me if I'm wrong but I believe the 6.19 is the yield since purchase. Your current rate would be 1.79 + 3.4 = 5.19.

[imoldernu]

Yes... current rate 5.19 cumulative total yield 6.19

[ronocnikral]

Quote:

Originally Posted by Mulligan Yep, it appears everything is dying on the vine, at least at this moment. I will just take my medicine and stay with the program. At 2% I have an outside chance to be alive in 36 years to see my cash assets double. At 1% it's 72 years. I won't be around for that, no chance. Inflation definitely on the tame side CPI wise anyways. The last 5 IBond interest rate cycles have been in order: 4.6%...3.06%...2.2%...1.76%... And now apparently 1.18%.

I'm young. I've been in on the frenzy, but I am upping my risk tolerance. With so much cash, 5 yr CD's yielding 2.7%, I've decided I can take on more risk, weathering a major storm and having enough to live for at least 2 years. No reason to dilly dally with 1.18% when I can be in the market......

[audreyh1]

Quote:

Originally Posted by Mulligan Yep, it appears everything is dying on the vine, at least at this moment. I will just take my medicine and stay with the program. At 2% I have an outside chance to be alive in 36 years to see my cash assets double. At 1% it's 72 years. I won't be around for that, no chance. Inflation definitely on the tame side CPI wise anyways. The last 5 IBond interest rate cycles have been in order: 4.6%...3.06%...2.2%...1.76%... And now apparently 1.18%.

Rates change every six months, and we have been low before. I remember getting 0% one period. 2009 I think?

Don't worry, inflation will go back up before too long .

[In the meantime, I'm sure enjoying the dropping fuel prices]

That's the point, right, we're just trying to make sure part of our cash stash keeps up with inflation?

[ERhoosier]

I have a bit in iBonds but as an inflation hedge rather than major source of income. You could increase current income by about half (~1.8% vs 1.18%) by investing in int-term bond index ETF vs May iBonds. (Depending on actual May iBond & actual IT index rates of course).