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|Subject: Re: Want somthing better than 7%||Date: 9/11/2000 2:22 PM|
|Author: rhecker||Number: 5046 of 20240|
Government I-bonds have a rate of 7.49% at the moment.
1. JohnP14 wants income now. He won't get the full return on I-Bonds unless he waits several years.
2. This year he is allowed to boy "only" $30K worth of I-Bonds; what about the other $170K?
I'm sorry - It seems I should have been more precise with my suggestion. Obviously, there are limits to what you can do with I-bonds, which Latinus has pointed out. One will not be able to invest the entire amount of $200K in these bonds in order to set up a steady stream of income starting tomorrow. You cannot cash in I-bonds until 6-months after buying them, and then they lose a few months of interest if you cash them before 5 years have passed. Furthermore, it is likely that during a possible 30-year holding period there will be many years in which the I-bonds return less than 7%, and it is even conceivable that they may return 0%. (but if that happens, one must ask what kind of return other 'safe' investments will be giving at the same time)
I-bonds may be an ideal part of JohnP14's investment plan since he is very averse to risk. Perhaps $30k worth of I-bonds now, $30k worth of I-bonds next year, and the rest of his cash in laddered CDs is one possible solution which would fulfill all of his requirements.
Maybe I-bonds are not the right kind of investment at all.
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