I Bonds

gino195 · #1 05-18-2006, 12:23 PM

looking at the forum for the 1st time- unbelievable info!

i got some $$ in I bonds (inflation+fixed return)- last time i looked, afew months ago the APR was ~6.8% (probably for nov 2005-may 2006), now it's 2.41%(!!) for may-nov 2006 and the site looks a bit different, so maybe it's 6 moths yield?
could this be correct? can I bonds yield (much) less than MM accounts?

any info will be helpful, thanks!

thing85 · #2 05-18-2006, 12:46 PM

I believe so, considering the fixed component is only 1% (if I remember correctly). I used to buy I bonds periodically but decided that for future treasury bonds, I'd just go with EE bonds. They're more stable with a guaranteed (albeit, lower) return. If I want a more volatile investment, there are obviously better options out there.

eastbay · #3 05-18-2006, 06:44 PM

[ QUOTE ]
looking at the forum for the 1st time- unbelievable info!

i got some $$ in I bonds (inflation+fixed return)- last time i looked, afew months ago the APR was ~6.8% (probably for nov 2005-may 2006), now it's 2.41%(!!) for may-nov 2006 and the site looks a bit different, so maybe it's 6 moths yield?
could this be correct? can I bonds yield (much) less than MM accounts?

any info will be helpful, thanks!

[/ QUOTE ]

Yeah, I got suckered in by the teaser rate as well. The new rate is atrocious, but we're locked now, at least for a year.

eastbay

gino195 · #4 05-19-2006, 06:03 PM

i'm in them for ~1.8 years, so i'll take the 3 month penalty and head out to an internet savings acct till i get another idea. didn't follow inflation close enough [img]/images/graemlins/frown.gif[/img]
thanks guys!

TomG · #5 05-20-2006, 02:52 AM

don't be so short-sighted. they actually *raised* the base rate from 1% to 1.4%. the overall yield tanked b/c the last cpi measurement was skewed due to hurricane katrina. if you're a long term investor, you're better off locking in the 1.4% base rate and accepting that the cpi is going to float than having the 1% plus cpi last period.

gino195 · #6 05-20-2006, 12:29 PM

i bought the bonds at 1% fixed, do you know if it's adjusted to 1.4% now?
interesting regarding katrina&CPI, didn't know that...

TomG · #7 05-20-2006, 08:08 PM

[ QUOTE ]
i bought the bonds at 1% fixed, do you know if it's adjusted to 1.4% now?
interesting regarding katrina&CPI, didn't know that...

[/ QUOTE ]
No the fixed portion stays the same for the lifetime of the bond. The inflation part floats based upon the CPI measurement. That's why it's somewhat shortsighted to be thrilled by last periods 1% + CPI vs. this periods 1.4% + CPI.