How on earth can the gov't claim that inflation over the last 6 months is equal to 0.50% as reflected in the new I-bond rates? Almost everything I'm spending money on has increased in price for the same quantity lately. Gas, travel (plane tickets used to be $250 RT, now they're at least $350), car insurance, education (an MBA from a "good school" is now $75k)...the list goes on. People seem to be distracted by price cuts in plasma TVs, but everything else (the essentials) costs more than it did a year ago. I am making more money than when I started working a year ago but in terms of my purchasing/saving power, I feel like I'm barely staying even. I can only imagine what it's like for a family with kids and their associated expenses.
Even the fed is at 5%, and that's supposed to be a risk-free return, yet we're expected to believe that price inflation is only a tenth of that? I certainly don't see peoples' salaries increasing by +5% per year, yet costs seem to be going up at least that much. Does anyone else agree with me or am I just being cranky? If you're going to call something "inflation-indexed" but it doesn't help you out when all your costs are increasing, whats the point?
The larger question is, do I keep my I-bonds from 2003 that are at 1.1% fixed or cash them in to buy TIPS (or something else entirely?). I don't have a tax-advantaged account to hold TIPS in, unfortunately.
Even the fed is at 5%, and that's supposed to be a risk-free return, yet we're expected to believe that price inflation is only a tenth of that? I certainly don't see peoples' salaries increasing by +5% per year, yet costs seem to be going up at least that much. Does anyone else agree with me or am I just being cranky? If you're going to call something "inflation-indexed" but it doesn't help you out when all your costs are increasing, whats the point?
The larger question is, do I keep my I-bonds from 2003 that are at 1.1% fixed or cash them in to buy TIPS (or something else entirely?). I don't have a tax-advantaged account to hold TIPS in, unfortunately.