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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: of 35397  
Subject: I-bond yields crash as expected... Date: 5/1/2002 12:17 PM
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New bonds issued May through October will pay a puny 2.57% through the next six months.

EE bonds are down only slightly, to 3.96%.

Hope you bought your I-bonds a few days ago. I haven't seen a fixed rate component posted yet, but I'm guessing it's probably only about 1%. That's down from 3.6% a couple years ago. And that's just the fixed rate portion!

So much for that alternative, at least for now...

#29, glad he loaded up when the fixed rate component was 3.4%
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Author: jtmitch Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3575 of 35397
Subject: Re: I-bond yields crash as expected... Date: 5/1/2002 12:26 PM
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The fixed component remains at 2%. See http://www.savingsbonds.gov/sav/sbirate2.htm

jtmitch

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Author: jrr7 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3576 of 35397
Subject: Re: I-bond yields crash as expected... Date: 5/1/2002 12:27 PM
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According to

http://www.savingsbonds.gov/sav/sbirate2.htm

the fixed rate remained at 2%.

The inflation number is 0.28%, which when combined with the fixed rate using the formula

Composite rate = [Fixed rate + 2 x Inflation rate + (Inflation rate X Fixed rate)] X 100
Composite rate = [0.0200 + 2 x 0.0028 + (0.0028 X 0.0200)] X 100
Composite rate = [0.0200 + 0.0056 + 0.000056] X 100
Composite rate = [0.025656] X 100
Composite rate = 0.0257 X 100
Composite rate = 2.57%

If you have a surplus of I-bonds with a 2% fixed rate, cash them in before they start earning peanuts. It's simple to find bank accounts paying more than 2.57% (although they're not tax-deferred).

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3577 of 35397
Subject: Re: I-bond yields crash as expected... Date: 5/1/2002 12:55 PM
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You can get Nuveen tax frees paying over 7% these days.

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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: 3578 of 35397
Subject: Re: I-bond yields crash as expected... Date: 5/1/2002 12:59 PM
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Where in the world did those numbers come from?

My cable notice yesterday had an increase of about 11 to 12%.

Think I could send it in to our FRB chairman, asking if it was
taken into consideration when determining the inflation rate?
Maybe not, but it is a nice thought :)

-upatnite2

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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: 3579 of 35397
Subject: Re: I-bond yields crash as expected... Date: 5/1/2002 1:01 PM
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You can get Nuveen tax frees paying over 7% these days.

What is that? Wow....
Anxiously waiting!!

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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: 3580 of 35397
Subject: Re: I-bond yields crash as expected... Date: 5/1/2002 1:18 PM
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Wow. The people who say the CPI-U rose only 0.28% in the last six months must be living in an alternate universe. It obviously doesn't include gasoline, health care, or any number of other things...

They REALLY need to fix how the inflation numbers are crunched.

#29


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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3581 of 35397
Subject: Re: I-bond yields crash as expected... Date: 5/1/2002 1:36 PM
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Nuveen: look at NSL and NQS traded on the NYSE.

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Author: aesirai Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3582 of 35397
Subject: Re: I-bond yields crash as expected... Date: 5/1/2002 4:01 PM
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Another good reason to avoid I-Bonds; they get to decide what index is used for inflation. At least with EE bonds, the long term bond market decides the rate.


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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3585 of 35397
Subject: Re: I-bond yields crash as expected... Date: 5/1/2002 8:29 PM
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I must say, I'm surprised. The inflation rate is in line of what we were expecting (mmaybe a bit low, but no one expected over 1%). What is intriguing is that not only is this the first time I-bonds have ever come in below, or even close to, EE bonds, we're talking losing out by almost 1.4%.

I'm reading this as an ominous sign (eh, Charlie?). They think inflation is going through the roof, so they don't dare go over the 2% fixed rate, even though they probably won't be selling a whole lot of I-bonds.

And, to anyone who is excited about having gotten an I-bond before the rate change, don't forget in 6 months you'll be getting 2.57% for the following 6 months, unless you cash in and lose 3 months interest and pay your taxes. Glad I stuck to CDs.

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Author: AcmeFool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3586 of 35397
Subject: Re: I-bond yields crash as expected... Date: 5/1/2002 9:05 PM
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And, to anyone who is excited about having gotten an I-bond before the rate change, don't forget in 6 months you'll be getting 2.57% for the following 6 months, unless you cash in and lose 3 months interest and pay your taxes. Glad I stuck to CDs.

At this stage of my life -- young; about to be married; no children -- the only thing I can see using savings bonds for is the less liquid portion of my emergency fund. For this role, I want a set-it-and-forget-it place to stash my money. My requirements for this investment are as follows: (1) principle is safe; (2) likely to return more than my brokerage account's MMF sweep; (3) no hassles. For me, savings bonds make a lot of sense in this role and over the next year or two, I plan to gradually move much of my emergency money to savings bonds.

Now...that said, I ran some calculations given the last 5 years of I-bond inflation rates and various fixed rates and compared these to the EE-bond rates for the same period. Granted, this is a limited sample size...but it appears that the "break-even" point where both bonds have the same average return occurs when the fixed-rate portion of I-bonds is at about 2.5% (actually slightly below 2.5% so far). At higher fixed-rates, you are better off in I-bonds; at lower fixed-rates, you are better off in EE-bonds.

Given this, I am thinking I should probably go with EE-bonds for my emergency fund "investments" over the next 6 months. Any thoughts from the bond masters?

ACME

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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: 3591 of 35397
Subject: Re: I-bond yields crash as expected... Date: 5/2/2002 3:06 AM
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Here's some additional info the the Nuveen ETF's.

The highest "Fed tax exempt" ETF here seems to be: NPM with a yield of
6.70%. Definitely worth getting more info on. I grabbed the ETF symbols below from one of Nuveen's pdf files and yahoo was kind enough to provide the criteria I asked for. If anything's missing, it can be easily added.


All of the dividends from these funds, with the exception of the Nuveen Senior Income Fund (NSL) and the Real Estate Income Fund (JRS), are free from regular Federal income tax. There were no dividend changes from the previous month.
Dividends from Nuveen's national municipal exchange-traded funds and portfolios are exempt from regular Federal income taxes, while dividends of single-state municipal funds and portfolios are also exempt from state and, in some cases, local income taxes for in-state residents. Dividends of the
municipal funds and portfolios may be subject to the Federal Alternative Minimum Tax for some shareholders.

Symbol Name Last Change Ex-Div Div/Shr Yield
NXP NUV SEL TX FREE 14.23 +0.21 +1.50% Apr 11 0.85 6.08
NXQ NUV SEL TX FREE 13.54 -0.02 -0.15% Apr 11 0.83 6.15
NXR NUV SEL TX FREE 13.33 +0.01 +0.08% Apr 11 0.80 5.99
NXC NUVEEN CAL SEL 14.58 +0.13 +0.90% Apr 11 0.77 5.31
NXN NUVEEN NY SEL 13.70 +0.02 +0.15% Apr 11 0.72 5.26
NUV NUVEEN MUNI VAL 9.41 +0.05 +0.53% Apr 11 0.51 5.45
NCA NUVEEN CAL VAL 9.90 +0.05 +0.51% Apr 11 0.52 5.24
NNY NUVEEN NY VAL 9.20 +0.03 +0.33% Apr 11 0.49 5.30
NMI NUVEEN MUN INCM 10.31 +0.06 +0.59% Apr 11 0.60 5.85
NIM NUVEEN SELECT 10.19 0.00 0.00% Apr 11 0.55 5.42
NPI NUVEEN PREMIUM 14.08 +0.04 +0.28% Apr 11 0.91 6.45
NPP NUVEEN PERFORM 14.35 +0.12 +0.84% Apr 11 0.89 6.28
NMA NUVEEN MUN ADV 14.80 +0.10 +0.68% Apr 11 0.94 6.41
NMO NUVEEN MUNI 14.30 +0.04 +0.28% Apr 11 0.91 6.40
NQM NUVEEN INV QUAL 14.54 +0.06 +0.41% Apr 11 0.94 6.46
NQI NUVEEN INS QUAL 15.17 +0.12 +0.80% Apr 11 0.91 6.06
NQS NUVEEN SELECT 14.37 +0.10 +0.70% Apr 11 0.93 6.52
NQU NUVEEN QUALITY 14.09 +0.06 +0.43% Apr 11 0.92 6.59
NIO NUVEEN INS MUNI 14.92 -0.02 -0.13% Apr 11 0.92 6.14
NPF NUVEEN MUNI 14.40 +0.15 +1.05% Apr 11 0.96 6.74
NIF NUVEEN PRE INS 15.12 0.00 0.00% Apr 11 0.94 6.23
NPM NUVEEN PREMIUM 14.48 +0.06 +0.42% Apr 11 0.97 6.70
NPT NUV PREM INCM 13.17 +0.17 +1.31% Apr 11 0.85 6.55
NPX NUVEEN INS PREM 13.48 +0.03 +0.22% Apr 11 0.82 6.11
NAD NUVEEN DIV ADV 14.85 +0.12 +0.81% Apr 11 0.93 6.31
NXZ NUVEEN DIV 2 14.10 0.00 0.00% Apr 11 0.91 6.43
NZF NUVEEN DV ADV 3 13.88 +0.03 +0.22% Apr 11 0.91 6.54
NCP NUVEEN CAL PER 14.55 +0.03 +0.21% Apr 11 0.89 6.16
NCO NUVEEN CAL MKT 14.89 +0.14 +0.95% Apr 11 0.91 6.14
NQC NUVEEN CAL INV 15.15 0.00 0.00% Apr 11 0.92 6.06
NVC NUVEEN CALIF SEL 15.00 -0.04 -0.27% Apr 11 0.91 6.06
NUC NUVEEN CAL QUAL 15.73 +0.15 +0.96% Apr 11 0.97 6.24
NPC NUV INS CA PREM 15.38 +0.02 +0.13% Apr 11 0.87 5.66
NCL NUV CA PREM 14.55 +0.06 +0.41% Apr 11 0.84 5.80
NCU NUVEEN CA PREM 13.56 +0.04 +0.30% Apr 11 0.83 6.12
NAC NUVEEN CA DIV 14.40 +0.01 +0.07% Apr 11 0.87 6.05
NVX NUVEEN CA DIV 2 14.29 +0.10 +0.70% Apr 11 0.88 6.17
NZH NUVEEN CA DV ADV 13.82 -0.01 -0.07% N/A N/A N/A
NUF NUVEEN FLA QUAL 15.59 -0.05 -0.32% Apr 11 0.97 6.21
NFL NUVEEN INS FLA 15.48 +0.28 +1.84% Apr 11 0.89 5.84
NNP NUVEEN NY PERF 15.09 +0.01 +0.07% Apr 11 0.93 6.17
NQN NUVEEN NY INV 14.90 +0.17 +1.15% Apr 11 0.89 6.03
NVN NUVEEN NY SELECT 14.61 +0.06 +0.41% Apr 11 0.89 6.14
NUN NUVEEN NY QUAL 14.55 +0.03 +0.21% Apr 11 0.88 6.07
NNF NUVEEN INS NY 15.19 +0.11 +0.73% Apr 11 0.88 5.85
NAN NUVEEN NY DIV 14.22 +0.02 +0.14% Apr 11 0.86 6.04
NXK NUVEEN NY DIV 2 13.96 +0.16 +1.16% Apr 11 0.85 6.17
NAZ NUVEEN ARIZONA 16.35 -0.05 -0.30% Apr 11 0.89 5.45
NFZ NUVEEN ARIZONA 15.63 +0.30 +1.96% Apr 11 0.84 5.48
NFC NUVEEN CT DIV 15.30 -0.06 -0.39% Apr 11 0.84 5.47
NTC NUVEEN CONN 16.16 +0.02 +0.12% Apr 11 0.85 5.28
NPG NUVEEN GA PREM 15.54 -0.01 -0.06% Apr 11 0.86 5.52
NZX NUVEEN GA DV ADV 14.72 -0.04 -0.27% N/A N/A N/A
NFM NUVEEN MD DIV 15.19 -0.04 -0.26% Apr 11 0.84 5.52
NMY NUVEEN MD PREM 15.25 +0.10 +0.66% Apr 11 0.86 5.66
NZR NUVEEN MD DV ADV 14.53 0.00 0.00% N/A N/A N/A
NMB NUVEEN MA DIV 15.85 -0.03 -0.19% Apr 11 0.88 5.52
NMT NUVEEN MA PREM 15.62 +0.05 +0.32% Apr 11 0.84 5.39
NUM NUVEEN MICHIGAN 15.45 +0.05 +0.32% Apr 11 0.91 5.88
NMP NUVEEN MICH 14.51 +0.15 +1.04% Apr 11 0.86 6.02
NZW NUVEEN MI DV ADV 14.15 -0.10 -0.70% N/A N/A N/A
NOM NUVEEN MISOURI 15.50 0.00 0.00% Apr 11 0.83 5.38
NQJ NUVEEN NJ INV 15.11 +0.11 +0.73% Apr 11 0.92 6.12
NNJ NUVEEN NJ PREM 14.87 +0.17 +1.16% Apr 11 0.86 5.88
NXJ NUVEEN NJ DIV 14.00 +0.02 +0.14% Apr 11 0.85 6.09
NNC NUVEEN N CAROL 15.45 +0.05 +0.32% Apr 11 0.83 5.42
NRB NUVEEN NC DIV 15.02 +0.02 +0.13% Apr 11 0.83 5.52
NNO NUVEEN NC DIV 2 15.00 +0.01 +0.07% Apr 11 0.82 5.48
NUO NUVEEN OH QUAL 17.19 +0.14 +0.82% Apr 11 0.94 5.52
NXI NUVEEN OH DIV 15.01 -0.04 -0.27% Apr 11 0.88 5.82
NBJ NUVEEN OH DV ADV 14.25 -0.20 -1.38% N/A N/A N/A
NQP NUVEEN PENN INV 14.73 +0.09 +0.61% Apr 11 0.91 6.23
NPY NUVEEN PA PREM 14.25 +0.09 +0.64% Apr 11 0.89 6.27
NXM NUVEEN PA DIV 14.45 +0.21 +1.47% Apr 11 0.88 6.19
NTX NUVEEN TEXAS 14.93 0.00 0.00% Apr 11 0.94 6.27
NPV NUVEEN VA PREM 15.76 +0.30 +1.94% Apr 11 0.87 5.63
NGB NUVEEN VA DIV 14.30 0.00 0.00% Apr 11 0.85 5.92
NNB NUVEEN VA DIV 2 14.50 +0.02 +0.14% Apr 11 0.83 5.72
NSL NUVEEN SENIOR 7.72 +0.02 +0.26% Apr 11 0.59 7.64
JRS NUVEEN RL ESTATE 15.95 -0.02 -0.13% Apr 11 1.35 8.45


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Author: jrr7 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3597 of 35397
Subject: Re: I-bond yields crash as expected... Date: 5/2/2002 11:53 AM
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Even if you lose 3 months' interest, if the difference in interest rates is high enough, you can make up the difference in under a year, based on some quick spreadsheet estimation.

It looks like it makes the most sense to wait to switch until the bonds have been at 2.57% for three months. That way you get the full benefit of the 4.40% rate.

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