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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: of 35797  
Subject: Re: maxing out on I bonds Date: 3/14/2001 1:27 PM
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I have been, and still am, strongly supicious about the purported "inflation protection" of I-bonds. They warn on the savingsbonds.gov website itself that during continued periods of high inflation, the bond's value won't keep up with inflation as there's a lag in setting the inflation rate. Also, the bonds use the CPI-U for setting the inflation rate, which has come under attack recently for not bothering to track all the sources of inflation (energy, gasoline, medical expenses are often described as things it ignores).

I also don't like that there are so many loopholes with buying savings bonds: you can use a cash back credit card; you can buy them at month-end and get paid interest from the start of the month; etc. Somebody has to pay the cost of these things, and my hunch is it's going to be me.

That said, when they're paying half a percent above what anybody else will pay for a safe investment, I couldn't pass them up. I just don't expect them to be valuable as a long-term holding.
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