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Bond, Treasury Bond
Old 08-25-2008, 10:22 AM   #1
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Bond, Treasury Bond

I finally managed to pick up Your Money or Your Life (for free! ), and I'm to the point where they tout the use of treasury bonds as the best investment. When the November auction comes around, I'd like to know enough to feel comfortable about participating. Until I do pick up a book on it, can someone tell me how the auctioning process itself goes?

I see I Bonds are bought at face value. There's a thread here recently about I Bond interest rates, but my question is in what ways are they better than treasury bonds? If there are links to other threads about this already, even better; my search fu martial arts still need much practice.
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Old 08-25-2008, 10:44 AM   #2
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If you don't already have an account open at I would initiate that now even if you don't put any money in it. I think they have added some extra security in the last year or so that may require more verifications and or mailing paperwork back and forth.
I believe the current annual maximum purchase of I-bonds is $10,000 ($5,000 online and $5,000). I-bonds pay a real rate (currently 0%) which lasts for the time you hold plus an inflation adjusted rate which resets every 6 months. The real rate is reset every 6 months so personally I am waiting until November to resume buying.
I have never purchased a T-Bond but I believe the auction process is the same as the T-bill auctions you can just place a "non-competitive bid" and it will get filled at the market rate. The downside of the T-Bond is inflation can put a hurtin on you. I enjoyed YMOYL also and found important messages there. I also like my bonds to be top quality with a strong prefernce for US Govt obligations. Do finish the book and do a little research on how Joe's strategy served him (long erosion of his standard of living has been everything I've read).
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Old 08-25-2008, 11:14 AM   #3
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YMOYL was an excellent book from a lifestyle perspective.

From an investment perspective, it sucked.

Skip ahead to Joe's later life where he lived in a group home, reused plastic wrap on food until it fell apart, and sifted broken glass out of a dropped jar of peanut butter. His 'dont worry' investing created quite a bit of worry when his buying power dropped to less than half of what it had been.
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.
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