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Old 11-03-2009, 08:33 AM   #21
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Originally Posted by mn54 View Post
What's the difference between an electronic I bond and a paper one? Is one purchased online and the other from a financial institution? I thought the 5K max. was for all I bond purchases.
Electronic i-bonds can be purchased from Treasury direct while paper i-bonds can be purchased from a bank (or other financial institution) or via payroll deduction.

Individual - Buy I Savings Bonds

The following link also explicitly says that you can buy $5,000 worth of electronic i-bonds and $5,000 worth of paper i-bonds per calendar year:

Individual - Purchase Limits

Through your TreasuryDirect account - which is established using your name and social security number, bank information, driver’s license and e–mail address – you can invest in electronic savings bonds (also referred to as book–entry savings bonds) each calendar year by purchasing as much as:
  • $5,000 in Series EE Bonds, and
  • $5,000 in I Series Bonds.
You may also invest the same amount in paper savings bonds -- using your name and social security number -- by purchasing as much as:
  • $5,000 in Series EE Bonds (which is equivalent to $10,000 face amount), and
  • $5,000 in I Series Bonds.

42 y/o, married, retirement portfolio = 43 x annual expenses
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Old 11-03-2009, 12:30 PM   #22
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Well you could get your limit now and again in January - which would double those amounts for you and spouse. Possibly use kids or parent SSN for additional purchases. (Carefully considering the educational benefit possibility)...

RATINOR: I believe the calculation is based on percentage change over the 6 month period.
The index went from 212.709 to 215.969 so a 1.532% change.
That times 2 = 3.064% will be the inflation component to which you add the fixed rate component.
Am I correct in assuming the 'inflation' was based on the previously deflated index number? In other words we didn't have to make-up the previous 'deflation' before getting a new inflation adjustment!! Looking at these over the long term this appears to be another bonus...

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Old 11-03-2009, 12:53 PM   #23
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Thanks for all the feedback on the I-bonds. It's another thing I learned today. I guess I would prefer to know what I'm getting when I purchase it and that's where CD's can't be beat for the safety. I enjoy the income off the CD's but I'm not desperate for it. Over the years I did well in the stock market (doubled my money) in the nineties. Then took a hit in the 2000's and got out for good. Time to stop guessing at my age so I'm into CD's. Right now everything is in at 4.5% for another 4 years and that looks pretty good. The $175K will probably go in at 3.5% for 4 years and by that time I think rates will be up.
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Old 11-03-2009, 01:31 PM   #24
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Frankly, I'm surprised to see I-bonds competitive with CDs again. The Last I-bond I bought was in 2003 and I will 'treasure' those I have from 2001/2... If I had a choice of buying 4yr CD at 3.5% or the 3.36% I-bond -- I'd choose the I-bond for the state/local tax advantages and the real possibility that all this gov't spending will eventually lead to some real inflation down the road. The small limits make this a rather small gamble either way. Seems very unlikely that inflation + 0.3% will be less than 3.5% over next 4-5yrs.

Actually our state tax is 5.75% so 3.5% after state tax is only ~3.29%! So inflation would have to be less than 3% annually for me to be better off with the CD. ymmv

My Mom's IRA is in a 7yr CD at 6.25% until 2014, sooo hopefully we'll see some higher rates when it matures...

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