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Author: Whomever One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35361  
Subject: Hope you bought your I-Bonds in October Date: 11/1/2001 10:04 AM
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New I-Bond rates just came out. For I-Bonds issued from November 2001-April 2002, the rate is 4.4%. The fixed rate is 2% and the inflation index is 2.38%. Here is a link for the news release.

http://www.usbonds.gov/com/comi1101.htm

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Author: questionthefool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2318 of 35361
Subject: Re: Hope you bought your I-Bonds in October Date: 11/1/2001 1:35 PM
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Yup, I did. I bought it online with my discover card. I got the Oct 1st date. So I am going to get 5.92 for October, 5.42 for 5 months after that. I do not have to pay my credit card bill till mid december and Discover is giving me back 1%. This is too good to be true.


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Author: Whomever One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2321 of 35361
Subject: Re: Hope you bought your I-Bonds in October Date: 11/1/2001 2:07 PM
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Yup, I did. I bought it online with my discover card. I got the Oct 1st date. So I am going to get 5.92 for October, 5.42 for 5 months after that. I do not have to pay my credit card bill till mid december and Discover is giving me back 1%. This is too good to be true.

Actually, you will get the 5.92% for six months. Since you bought in October, your rate period is October-March, and April-September. In April you will still get the 3% fixed but the CPI-based component will be the Nov01 Rate of 2.38%.

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Author: questionthefool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2322 of 35361
Subject: Re: Hope you bought your I-Bonds in October Date: 11/1/2001 2:26 PM
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Thanks. That was my original understanding. But confused with the following table at http://www.savingsbonds.gov/sav/sbirate2.htm
For Issue dates of May 2001 - Oct 2001, the composite rate shows up as 5.42%. Isn't that confusing?

EARNINGS RATES THAT BONDS WILL BEGIN EARNING BETWEEN
NOV 2001 AND APR 2002


ISSUE
DATES EARNINGS
RATES*
NOV 2001 - APR 2002 4.40%
MAY 2001 - OCT 2001 5.42%
NOV 2000 - APR 2001 5.82%
MAY 2000 - OCT 2000 6.02%
NOV 1999 - APR 2000 5.82%
MAY 1999 - OCT 1999 5.72%
NOV 1998 - APR 1999 5.72%
SEP 1998 - OCT 1998 5.82%
*annual rates compounded semiannually



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Author: Littlechap Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2325 of 35361
Subject: Re: Hope you bought your I-Bonds in October Date: 11/1/2001 4:12 PM
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For Issue dates of May 2001 - Oct 2001, the composite rate shows up as 5.42%. Isn't that confusing?

There is something wrong somewhere. I went to that site this morning and saw the same chart you posted, but with the number 5.92%. Since the new interest rate was not posted until today, I'm sure that had to be accurate at the time.

I just emptied my browser's cache and reloaded the page, and I see the number you're quoting. I do not know what it means. Perhaps somebody has an answer, or perhaps somebody might wish to inquire to somebody at Treasury and post a reply here.

By the way, the poster who said he/she got a date of 10/01 -- I believe that probably referred to October of 2001 -- NOT the first day of October. Just a guess that the Treasury Dept. is not back-dating bonds from the end of the month back to the beginning.

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Author: questionthefool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2326 of 35361
Subject: Re: Hope you bought your I-Bonds in October Date: 11/1/2001 4:18 PM
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>By the way, the poster who said he/she got a date of 10/01 -- I >believe that probably referred to October of 2001 -- NOT the first day >of October. Just a guess that the Treasury Dept. is not back-dating >bonds from the end of the month back to the beginning

My understanding is, that is how it works. Anytime you buy during a month, the date of the bond will be the 1st of the month. You get interest for that whole month.


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Author: krishnarama One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2327 of 35361
Subject: Re: Hope you bought your I-Bonds in October Date: 11/1/2001 4:35 PM
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Anytime you buy during a month, the date of the bond will be the 1st of the month

I am not sure about this issue. I bought my I bonds on Oct 23. While I was buying them online it displayed a message saying my effective date may be starting from November. If that is the case probably my rate of return would be 4.40. But my intention was to get the 5.93% rate. I do not know would be my effective data until I receive them

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Author: foobar73 Big red star, 1000 posts Feste Award Nominee! Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2329 of 35361
Subject: Re: Hope you bought your I-Bonds in October Date: 11/1/2001 4:43 PM
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There is something wrong somewhere. I went to that site this morning and saw the same chart you posted, but with the number 5.92%. Since the new interest rate was not posted until today, I'm sure that had to be accurate at the time.

I just emptied my browser's cache and reloaded the page, and I see the number you're quoting. I do not know what it means. Perhaps somebody has an answer, or perhaps somebody might wish to inquire to somebody at Treasury and post a reply here.


I'd had some false misconceptions regarding I-bonds myself, until "Whomever" pointed out the facts on the Online Banking board.

The rates on I-bonds change every six months, starting from six months from the date of issue. The 5.42% in the table mentioned takes effect at that time. Up until this point, you will still receive the original 5.92%, if the bond was issued in October.

http://boards.fool.com/Message.asp?mid=16030138 has a link that explains this in more detail.

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Author: auslander Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2330 of 35361
Subject: Re: Hope you bought your I-Bonds in October Date: 11/1/2001 5:08 PM
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The rates on I-bonds change every six months, starting from six months from the date of issue. The 5.42% in the table mentioned takes effect at that time. Up until this point, you will still receive the original 5.92%, if the bond was issued in October.

That is exactly how I understand I Bonds to work too. Check this link:

http://www.publicdebt.treas.gov./sav/sbirate2.htm

auslander

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Author: questionthefool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2332 of 35361
Subject: Re: Hope you bought your I-Bonds in October Date: 11/1/2001 8:01 PM
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>>For Issue dates of May 2001 - Oct 2001, the composite rate shows up >>as 5.42%. Isn't that confusing?

>There is something wrong somewhere. I went to that site this morning >and saw the same chart you posted, but with the number 5.92%. Since >the new interest rate was not posted until today, I'm sure that had to >be accurate at the time.

>I just emptied my browser's cache and reloaded the page, and I see the >number you're quoting. I do not know what it means. Perhaps somebody >has an answer, or perhaps somebody might wish to inquire to somebody >at Treasury and post a reply here.


OK, I read the stuff at the savingbond website again. The table I quoted before has to be interpreted as follows:

"The fixed rate remains the same for the life of an I Bond. "

"The Treasury Department also announces the inflation rate that will be in effect for all I Bonds when they enter a new semiannual interest period during the next six months."

Based on two statements, the table represents the interest rate that will be earned once the I bond enters a new semiannual interest period.
So, bonds bought in October will earn 5.92 during October-March. Starting March '2002 they will earn 5.42.



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Author: upatnite2 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2333 of 35361
Subject: Re: Hope you bought your I-Bonds in October Date: 11/1/2001 10:06 PM
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Anytime you buy during a month, the date of the bond will be the 1st of the month

I am not sure about this issue. I bought my I bonds on Oct 23. While I was buying them online it displayed a message saying my effective date may be starting from November. If that is the case probably my rate of return would be 4.40. But my intention was to get the 5.93% rate. I do not know would be my effective data until I receive them


You should have received 2 email from the gov. The first acknowledging your order, and the 2nd when they received the payment for them. As you placed your order on 10/23, the bonds most definitely will have an Oct. date on them. Also, the bonds are issued in monthly increments, so basically yes, you do get interest for the entire month!!



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Author: Mark0Young Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2335 of 35361
Subject: Re: Hope you bought your I-Bonds in October Date: 11/1/2001 10:38 PM
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The fixed rate is 2%

Yuck! I'm glad I decided to increase my I-Bond holdings before October 31!

I think I'll tone down my recommendation for I-Bonds for the less liquid half of one's emergency fund.

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2336 of 35361
Subject: Re: Hope you bought your I-Bonds in October Date: 11/1/2001 10:41 PM
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>> I think I'll tone down my recommendation for I-Bonds for the less liquid half of one's emergency fund. <<

Isn't that the truth. I expected the fixed rate to fall considerably, but not by a full percentage point. Ouch!

#29, enjoying a 3.4% fixed rate in his emergency fund


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Author: Littlechap Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2340 of 35361
Subject: Re: Hope you bought your I-Bonds in October Date: 11/2/2001 12:59 AM
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Hi auslander,

That page is essentially the same one cited earlier, but with a different URL.

However, it's worth having the link again. A more careful reading of it explains the situation. Simply put, it takes a bit of the gloss off the deal. The good news is that buying in October, one got a full point higher in the basic fixed rate, compared to bonds released in November. The bad news is that in just two days, those November bonds have lost 1/4 point of yield due to the decrease in the inflation rate calculation. Still, it is nice to have that extra point in the fixed rate since it will not change. I hope we get a nice "heads up" warning next time they decide to *increase* the fixed rate again, the same way this recent decrease had been so publicly foretold. :-)

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