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Author: sheople2 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75335  
Subject: CDs, Ibonds, EE Bonds, or Indiv TIPS? Date: 1/13/2009 10:33 PM
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Im 41, on SSDI. No tax liability.

Is there an easy way to decide where to put my bond allocated money? I will not be using it for several years.

I've ruled out municipal bonds, treasury notes and bond funds, the reasons for which are in my other recent post.

I plan on putting my emergency money with Emigrant Bank at 4%.
The rest of my safe money is in a CD currenly earning almost 4% but is due to mature in 2 weeks.

I also planned on letting the CD roll over at what will probably be 3% for a 6 month maturity.

Should a portion of that CD bond money be in individual TIPS, IBonds or EE Bonds for better yields? Can someone help me easily determine which of these is most appropriate for me?

I'm obviously going for the best rates and setting up something that is not complicated.

Please keep answers simple.

Many Thanks.
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Author: Fuskie Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65155 of 75335
Subject: Re: CDs, Ibonds, EE Bonds, or Indiv TIPS? Date: 1/18/2009 1:34 PM
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Sorry, but there are no easy answers. If you are only interested in preservation and safety, then stick with CDs for as long a term as you feel comfortable. If you are interested in easy access over time, then a money market fund might be appropriate. If you are willing to take a risk, consider a high yield bond fund or dividend equity fund. It all depends on what your goals are for this money.

Fuskie
Who expects if financial decisions were simple, there would be no need for TMF...

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Author: sheople2 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65159 of 75335
Subject: Re: CDs, Ibonds, EE Bonds, or Indiv TIPS? Date: 1/19/2009 10:33 PM
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Fuskie,

I want the best of both worlds - Safety plus a good return. :)

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Author: hockeypop Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65160 of 75335
Subject: Re: CDs, Ibonds, EE Bonds, or Indiv TIPS? Date: 1/20/2009 5:04 AM
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I want the best of both worlds - Safety plus a good return. :)

That can be guaranteed. You might still be able to get past security and see Madoff ; )

H

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Author: temsike Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65162 of 75335
Subject: Re: CDs, Ibonds, EE Bonds, or Indiv TIPS? Date: 1/20/2009 11:17 AM
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Why don't you just go with a good bond fund like BND (ER=0.1%)?

IMHO, I'd also add BWX (ER=0.5%) to diversify your fixed income out of the US dollar.

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Author: sheople2 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65172 of 75335
Subject: Re: CDs, Ibonds, EE Bonds, or Indiv TIPS? Date: 1/20/2009 8:53 PM
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Does anyone know the current rates on IBonds? I went to treasurydirect.gov site a few times now, and I can't find it.

Also, are there two rates that you have to add together? What rate are you guaranteed now as long as you don't cash it in early?

Thanks.

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Author: sheople2 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65173 of 75335
Subject: Re: CDs, Ibonds, EE Bonds, or Indiv TIPS? Date: 1/20/2009 8:56 PM
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I also forgot to add that I can't find the current rates on TIPS on that site either.

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Author: tjscott0 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65174 of 75335
Subject: Re: CDs, Ibonds, EE Bonds, or Indiv TIPS? Date: 1/20/2009 10:04 PM
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Does anyone know the current rates on IBonds?

5.64% Rates effective through April 30, 2009. New rates will be posted May 1, 2009.

http://www.treasurydirect.gov/indiv/indiv.htm

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Author: tjscott0 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65175 of 75335
Subject: Re: CDs, Ibonds, EE Bonds, or Indiv TIPS? Date: 1/20/2009 10:08 PM
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I also forgot to add that I can't find the current rates on TIPS on that site either.

I believe they fluctuate daily.
Last auction results:
http://www.treasurydirect.gov/RT/RTGateway?page=institHome

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Author: sheople2 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65176 of 75335
Subject: Re: CDs, Ibonds, EE Bonds, or Indiv TIPS? Date: 1/20/2009 10:31 PM
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5.64 is a great rate, isn't it? Is it smart to lock in that IBond rate for the next 5 years?

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Author: sheople2 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65177 of 75335
Subject: Re: CDs, Ibonds, EE Bonds, or Indiv TIPS? Date: 1/20/2009 10:51 PM
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Also, someone told me that with my tax situation, (the fact that I only receive SSDI and I owe no taxes) that TIPS would be a better rate of return than IBonds. That confuses me because IBonds yield 5.64% and a 5-yr TIPS rate is 3.27%.

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Author: tjscott0 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65178 of 75335
Subject: Re: CDs, Ibonds, EE Bonds, or Indiv TIPS? Date: 1/21/2009 1:00 AM
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5.64 is a great rate, isn't it? Is it smart to lock in that IBond rate for the next 5 years?

The rate is good only until 5/1/2009. Then it changes. Then changes again in 6 months.

The rate is a combination of fixed rate plus inflation rate. The inflation rate has been high. Remember $4/gallon gasoline last summer.

Anyway here is link to page showing how the rate is figured.

http://www.treasurydirect.gov/indiv/research/indepth/ibonds/...

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