Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 08-17-2008, 12:17 PM   #21
Thinks s/he gets paid by the post
Bikerdude's Avatar
 
Join Date: Jul 2006
Posts: 1,901
Quote:
Originally Posted by Alan View Post

Is there an easier way to see the fixed rate on a bond?
Just use the 'Savings Bond Caclulator' on the link above. It gives the current rate and value.
__________________

__________________
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
Bikerdude 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 08-17-2008, 02:11 PM   #22
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
Quote:
Originally Posted by ziggy29 View Post
When the Treasury can borrow for 4% without assuming inflation risk, and if they think inflation will remain fairly high, there's little incentive for them to offer much in the way of inflation-protected securities.

If you could get a mortgage at a fixed 4%, would you consider an adjustable rate mortgage that will see a rise in interest rates if inflation rages on? Neither would the government. Sucks as a saver, but as a taxpayer it's probably a good idea.
I'll add a little. Governments get a great deal when they issue debt denominated in their own currency - they can print money to pay it off. This doesn't work as well with TIPS and I-Bonds. I've heard that Greenspan wanted TIPS as a data source - one more window into what investors were thinking.

I-Bonds were probably aimed at getting a few more dollars from savings bonds - I've always guessed that the lower yields more than offset the costs of the lower average size.

I could see the Treasury keeping TIPS around just for the information, but I don't see them wanting to let the total value outstanding get up to any meaningful fraction of total debt.
__________________

__________________
Independent is offline   Reply With Quote
Old 08-17-2008, 02:27 PM   #23
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,109
Quote:
Originally Posted by Alan View Post
Is there an easier way to see the fixed rate on a bond?
Quote:
Originally Posted by Bikerdude View Post
Just use the 'Savings Bond Caclulator' on the link above. It gives the current rate and value.
But it does not give the fixed rate, just the total rate.

You have more work to do to calculate the fixed rate.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is offline   Reply With Quote
Old 08-17-2008, 02:53 PM   #24
Thinks s/he gets paid by the post
Bikerdude's Avatar
 
Join Date: Jul 2006
Posts: 1,901
Quote:
Originally Posted by Alan View Post
But it does not give the fixed rate, just the total rate.

You have more work to do to calculate the fixed rate.
When you say "fixed rate" do you mean the rate it was issued at?
__________________
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
Bikerdude is offline   Reply With Quote
Old 08-17-2008, 03:05 PM   #25
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,109
Quote:
Originally Posted by Bikerdude View Post
When you say "fixed rate" do you mean the rate it was issued at?
Every 6 months (May and Nov) the Treasury issue bonds that are comprised of 2 interest rates, a fixed rate and a variable rate. If you buy an I-Bond today or anytime up to Nov 1st the fixed rate is 0% and the variable rate is 4.84%. So if you have a bond issued in April 2004, it was issued with a fixed rate of 1.13% giving a total rate of 5.97%. In Nov if the rate goes to 3% then the bond you bought in May this year will go to 3% for the next 6 months while the one bought in May 2004 goes to 4.13%
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is offline   Reply With Quote
Old 08-17-2008, 03:58 PM   #26
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,428
For people who are not familiar with I bonds, the fixed rate is for life of the bond. I wonder if any of us bought I bonds during May 2000 - Oct 2000, when the fixed rate was 3.60%. You would be "golden".

Obviously, the Treasury had problems raising money then, so had to give away a heck of a premium, and also let you buy a whole lot more than the lower limit now. Between paper and electronic forms, and between a married couple ($30K x 4), you've got to be very rich to have that much cash to put away each year.

Now that they have cut the fixed rate to 0%, I wonder who would be buying. Too much cash sloshing around, trying to get some "meager but safe" returns. Time to get some stocks, anybody?

P.S. I saw that Bikerdude did get some in the above time frame. Good for you! I did not.
__________________
NW-Bound is offline   Reply With Quote
Old 08-17-2008, 04:18 PM   #27
Full time employment: Posting here.
friar1610's Avatar
 
Join Date: Jun 2002
Posts: 820
Quote:
Originally Posted by NW-Bound View Post
[SIZE=1][FONT=Arial]For people who are not familiar with I bonds, the fixed rate is for life of the bond. I wonder if any of us bought I bonds during May 2000 - Oct 2000, when the fixed rate was 3.60%.
I got a bunch at 3.5% but ran up against the annual limit on how much you could buy. Then when I got to the next time I could buy, I was shorter on cash, so didn't buy up to the max. By the time I had more cash the rate had dropped below what I thought was prudent to buy.

Any way you look at it, a 3.5% real rate of return on a guaranteed, completely safe investment is a great thing for the fixed income portion of a portfolio. Because of the tax deferral, my thinking is that my I-Bonds will be the very last thing I will sell (and, if I can afford it, I'll use the proceeds to help my grandkids in college and avoid the tax altogether.)
__________________
friar1610
friar1610 is online now   Reply With Quote
Old 08-17-2008, 05:34 PM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Quote:
Originally Posted by NW-Bound View Post
For people who are not familiar with I bonds, the fixed rate is for life of the bond. I wonder if any of us bought I bonds during May 2000 - Oct 2000, when the fixed rate was 3.60%. You would be "golden".

Obviously, the Treasury had problems raising money then, so had to give away a heck of a premium
That and nobody really quite understood or wanted to buy ibonds and tips back then. So they were...umm...'marked to market'.

Hell, the stock market was going up at 25-30% a year and had been for 5 years. Who the hell wanted to buy savings bonds? Gimme some of them there tech stocks!

So they sold at a premium until the market took a dump and people figured out what they were and why they might want to incorporate them into their portfolio. After which they paid slightly more than bupkus.

Funny how wistful people get about the potential for having bought bonds that paid 3.xx% plus an inflation calculation that may or may not apply to them, but are leery of buying a mutual fund that pays a dividend higher than that, and has total returns that have well exceeded anything that TIPS or iBonds have ever paid...

When I have a chance, I'll have to dig up a few of the threads from a few years ago when the stock market was roaring and the CPI was barely registering inflation and everyone was glad they could dump their iBonds with only a nominal penalty.

And those mutual funds I mentioned were still paying ~4% and improving their capital value by another 3-4%+...

What do you do all day indeed...
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 08-17-2008, 05:56 PM   #29
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,428
Quote:
Originally Posted by cute fuzzy bunny View Post
...are leery of buying a mutual fund that pays a dividend higher than that, and has total returns that have well exceeded anything that TIPS or iBonds have ever paid...

Yeah, like those dividend-paying MFs that I have that were loaded with financials...

Seriously, it may be good time to buy stocks now. I won't cash out my I-bonds though. Got some MM's to go shopping with first. Slooowly, a few hundred shares at a time ...
__________________
NW-Bound is offline   Reply With Quote
Old 08-17-2008, 06:41 PM   #30
Thinks s/he gets paid by the post
Bikerdude's Avatar
 
Join Date: Jul 2006
Posts: 1,901
Quote:
Originally Posted by cute fuzzy bunny View Post
That and nobody really quite understood or wanted to buy ibonds and tips back then. So they were...umm...'marked to market'.

Hell, the stock market was going up at 25-30% a year and had been for 5 years. Who the hell wanted to buy savings bonds? Gimme some of them there tech stocks!
Exactly! The reason to have an asset allocation and to stick with it IMHO.
__________________
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
Bikerdude is offline   Reply With Quote
Old 08-17-2008, 09:25 PM   #31
Full time employment: Posting here.
friar1610's Avatar
 
Join Date: Jun 2002
Posts: 820
Quote:
Originally Posted by Bikerdude View Post
Exactly! The reason to have an asset allocation and to stick with it IMHO.
A point well taken. Sticking to an AA plan hasn't given me the chance to brag a lot about gains at cocktail parties. But it's kept me comfortably retired for 5+ years.
__________________

__________________
friar1610
friar1610 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
Savings Bonds JPatrick FIRE and Money 6 04-26-2008 03:25 PM
Savings bonds -> 529 twaddle FIRE and Money 11 12-11-2007 01:10 PM
US Savings Bonds V S&P 500 burch64 FIRE and Money 17 09-28-2006 11:22 PM
EE savings bonds - when do they pay? Irwin41 FIRE and Money 2 02-05-2006 10:07 PM
Using Savings Bonds as Gap Filler Otto Thompson FIRE and Money 6 06-14-2004 06:50 PM

 

 
All times are GMT -6. The time now is 05:54 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.