Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Inflation linked savings bonds report negative inflation
Old 06-02-2015, 08:55 AM   #1
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Houston
Posts: 1,435
Inflation linked savings bonds report negative inflation

Those of you holding I-bonds (like me) from the US Treasury should note that the inflation component is now -1.6%. Ridiculous...I can tell you that none of my expenses have gone down 1.6% in the last year. I guess they are juking the stats.

Quote:
The earnings rate combines a 0.00% fixed rate of return with the -1.60% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U). The CPI-U decreased from 238.031 in September 2014 to 236.119 in March 2015, a six-month change of -0.80%.
https://www.treasurydirect.gov/news/...ondratespr.htm
__________________

__________________
soupcxan is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-02-2015, 08:59 AM   #2
Thinks s/he gets paid by the post
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 4,094
I've noticed we've had some negative CPI the last few months
__________________

__________________
Swing hard, look up
Big_Hitter is online now   Reply With Quote
Old 06-02-2015, 09:22 AM   #3
Thinks s/he gets paid by the post
 
Join Date: Jul 2002
Posts: 1,038
You didn't see a reduction in gas prices from Sept 2014 My gas expenses are way down. So was the natural gas for heating the house! We had a coldest winter in 10 years and my heating bill was way down.
__________________
RE2Boys is online now   Reply With Quote
Old 06-02-2015, 09:37 AM   #4
Recycles dryer sheets
shotgunner's Avatar
 
Join Date: Jun 2008
Posts: 454
Quote:
Originally Posted by soupcxan View Post
Those of you holding I-bonds (like me) from the US Treasury should note that the inflation component is now -1.6%. Ridiculous...I can tell you that none of my expenses have gone down 1.6% in the last year. I guess they are juking the stats.



https://www.treasurydirect.gov/news/...ondratespr.htm

I have held some I Bonds for a little more than 10 years. This has happened before a few years ago. They will not go negative but may pay 0% for 6 months. When the price of oil has skyrocketed they gave me the best 6 month return, when oil has tanked they have gone to 0%. My I Bonds have a 1% fixed rate, some lucky folks have a 3% fixed rate. If inflation is negative the fixed rate can be eaten away and they can go 0% return.
__________________
Never surrender what you really want for what you want right now.
shotgunner is offline   Reply With Quote
Old 06-02-2015, 10:28 AM   #5
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Houston
Posts: 1,435
Quote:
Originally Posted by RE2Boys View Post
You didn't see a reduction in gas prices from Sept 2014 My gas expenses are way down. So was the natural gas for heating the house! We had a coldest winter in 10 years and my heating bill was way down.
Gasoline is down but it is only a few percent of my overall spending. Everything else is flat or up. Natural gas, which my heating and electric bills are based on, doesn't seem to have changed much.
__________________
soupcxan is offline   Reply With Quote
Old 06-02-2015, 11:09 AM   #6
Recycles dryer sheets
Rosie's Avatar
 
Join Date: Jun 2010
Location: NorCal
Posts: 360
I bought some I-bonds in 2000-2001 and they're currently paying between 4.5% and 5.1%. I wish I bought more.
__________________
Doing nothing is underrated.
Rosie is offline   Reply With Quote
Old 06-02-2015, 12:50 PM   #7
Thinks s/he gets paid by the post
 
Join Date: May 2014
Location: Utrecht
Posts: 2,212
Quote:
Originally Posted by soupcxan View Post
Gasoline is down but it is only a few percent of my overall spending. Everything else is flat or up. Natural gas, which my heating and electric bills are based on, doesn't seem to have changed much.
It seems to be all fuel. So your experience matches everyone else's except maybe you use a lot less fuel. That's it.

Table 1. Consumer Price Index for All Urban Consumers (CPI-U): U. S. city average, by expenditure category

What went down + relative weight:
  • 4%: energy commodities: dropped 30%
  • 0.8%: gas utility: dropped 16%
  • 0.7%: airlines (fuel again): -7.5%


That's 30%*4% + 16%*0.8% + 7.5%*0.7% = -1.4% (roughly)
__________________
Totoro is offline   Reply With Quote
Old 06-02-2015, 04:30 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,376
Quote:
Originally Posted by Rosie View Post
I bought some I-bonds in 2000-2001 and they're currently paying between 4.5% and 5.1%. I wish I bought more.

Whenever your next 6 month cycle begins Rosie you will be getting 1.4% for the then following 6 months assuming your I Bonds were the 3% fixed, due to the negative inflation adjustment. If I had them I would be hanging on also. But I only maxed out the past 5 years. I threw in the towel earlier this year and am liquidating the last on mine this month.


Sent from my iPad using Tapatalk
__________________
Mulligan is offline   Reply With Quote
Old 06-03-2015, 12:05 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,459
Quote:
Originally Posted by soupcxan View Post
Those of you holding I-bonds (like me) from the US Treasury should note that the inflation component is now -1.6%. Ridiculous...I can tell you that none of my expenses have gone down 1.6% in the last year. I guess they are juking the stats.



https://www.treasurydirect.gov/news/...ondratespr.htm
That -1.6% rate is annualized, and corresponds to -0.8% CPI drop over a 6 month period.
__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is online now   Reply With Quote
Old 06-03-2015, 09:36 AM   #10
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,905
Really starting to think the ee bonds were the better deal...
__________________
Fermion is offline   Reply With Quote
Old 06-03-2015, 02:46 PM   #11
Recycles dryer sheets
 
Join Date: Jul 2013
Posts: 388
Quote:
Originally Posted by Fermion View Post
Really starting to think the ee bonds were the better deal...
Only if you keep them for 20 years.
__________________
mrfeh is offline   Reply With Quote
Old 06-03-2015, 04:57 PM   #12
Recycles dryer sheets
Ticker's Avatar
 
Join Date: Nov 2013
Location: waldheim
Posts: 126
I cashed my 0% purchases in today, will transfer the money to my discover bank account.
I just can't stomach 0%....
I can always buy more later if the core interest rate picks up... damn lazy money
__________________
Prepare today for the demands of tomorrow. Plan your move.
Ticker is offline   Reply With Quote
Old 06-03-2015, 07:06 PM   #13
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Houston
Posts: 1,435
Quote:
Originally Posted by audreyh1 View Post
That -1.6% rate is annualized, and corresponds to -0.8% CPI drop over a 6 month period.
Yeah, it means my 2001 I-bonds will be earning a puny 1.38% for the next six months...sucks...
__________________
soupcxan is offline   Reply With Quote
Old 06-03-2015, 09:50 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,376
Quote:
Originally Posted by Ticker View Post
I cashed my 0% purchases in today, will transfer the money to my discover bank account.
I just can't stomach 0%....
I can always buy more later if the core interest rate picks up... damn lazy money

I matched you today...had liquidated all IBonds until this last batch that reached 1 year anniversary this June 1. I saw they were already on the 0% rate so I withdrew them. My Treasury Direct account will be bone dry real soon.


Sent from my iPad using Tapatalk
__________________
Mulligan is offline   Reply With Quote
Old 06-03-2015, 11:05 PM   #15
Full time employment: Posting here.
bjorn2bwild's Avatar
 
Join Date: Mar 2013
Location: Western US
Posts: 690
I know this is picking up pennies, but if the I-bond is less than five years old, you will forfeit the last three months interest - better to wait three months at 0% before cashing in?
__________________
How's it going to end..............
bjorn2bwild is offline   Reply With Quote
Old 06-04-2015, 08:45 AM   #16
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,905
I can't stomach 0% either. I am thinking about moving my small amount of I-bonds into my Chase saving account that pays 0.01%
__________________
Fermion is offline   Reply With Quote
Old 06-04-2015, 08:49 AM   #17
Recycles dryer sheets
 
Join Date: Jul 2013
Posts: 388
Cashing in I bonds seems a bit short-sighted to me. The current interest rate is temporary. Once sold, you can never truly replace them, due to the annual purchase limit.
__________________
mrfeh is offline   Reply With Quote
Old 06-04-2015, 09:14 AM   #18
Thinks s/he gets paid by the post
 
Join Date: Jul 2003
Location: Pasadena CA
Posts: 2,695
Quote:
Originally Posted by Fermion View Post
I can't stomach 0% either. I am thinking about moving my small amount of I-bonds into my Chase saving account that pays 0.01%
That is a small enough difference that it doesn't look significant to cash in bonds. They are a separate fixed income asset for me, I keep them as 'emergency cash' after one year, I can sell them if I need the money it is one day electronic transfer and it is state tax free, although the 0 rate means nobody pays state tax, I guess.
__________________
T.S. Eliot:
Old men ought to be explorers
yakers is offline   Reply With Quote
Old 06-04-2015, 01:26 PM   #19
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,816
I figure that the negative is driven by oil/gas. In a few months or a few years, they will go back up. We'll see a big jump in CPI, and I-bonds will be stars.

If the CPI stays down, my non-COLA'd pension will be a more important part of my retirement income than I expected.
__________________
Independent is offline   Reply With Quote
Old 06-04-2015, 01:35 PM   #20
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,038
Quote:
Originally Posted by Independent View Post
I figure that the negative is driven by oil/gas. In a few months or a few years, they will go back up. We'll see a big jump in CPI, and I-bonds will be stars.
That's my view as well. The steep drop in oil prices has been driving inflation down, but it won't go on forever. At some point, oil prices will stabilize or even bounce back and inflation will return. So I am not selling my i-bonds (I actually bought more with my tax refund this year), because once you sell them, you can't jump back in because of the low annual purchase limit. In the meantime, my CD ladder is still paying 4% so my safe money is more than keeping up with inflation, even with i-Bonds paying 0%.
__________________

__________________
FIREd is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Prize Linked Savings Alan FIRE and Money 2 03-04-2014 02:34 PM
FDIC to Explore Prize-linked Savings Helena FIRE and Money 7 07-23-2009 09:15 PM
Two linked problems & solutions: retirement savings and Social Security/Medicare Nords FIRE and Money 35 06-10-2009 12:09 PM
Sallie Mae CPI-linked bonds SC FIRE and Money 69 12-27-2006 09:55 AM
US Personal Savings Now Negative? ESRBob FIRE and Money 7 11-05-2005 04:10 PM

 

 
All times are GMT -6. The time now is 02:47 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.