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Author: dmlm70 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35400  
Subject: Re: TreasuryDirect Date: 3/18/2006 10:06 PM
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Recommendations: 2
Lokicious:

You are correct that new I-Bond purchases must be re-examined every 6 months as the rates and conditions change. I was responding to Ali's question as to whether a couple could purchase more than $60,000. year in paper I-Bonds and presented what I believe to be the best source for information on any type of US Savings Bonds. I was not attempting to comment as to the merits of investing in I-Bonds as compared with other investments avail. at this time.

We began buying I-Bonds in November 1999 when the fixed rate component was 3.4% and continued buying them through May of 2001 at 3.0% fixed rate. November 1, 2001 the fixed rate dropped to 2% and we have not bought any since. The current composite rate of the bonds we hold is 8.73% to 9.13% tax deferred and exempt from state and local taxes. I only wish that I had known then that I could have purchased more than the stated $30,000. per person per year. I did not buy Tom Adams book until 2005 and through his e-mail alerts, he keeps us apprised of any significant changes in bonds. It reduces the necessity of having to rebuy his book every 6 months. I do however recommend that a copy of this book be in everyones investment library.

When the rates on EE bonds were pegged to 90% of the 5 year Treasury, even the lowly EE could be included in a savings bond portfolio, however, since they are now are a fixed rate and with the fear that inflation is rearing again, it would be difficult to include them in any long range stratagy.

I too wish they would raise the fixed rate of the I-Bond. Having the high inflation component and the extremely low fixed component is cause for concern if we ever have a deflationary period. If you enroll in Savings Bond Alerts e-mail alerts, he will give you his best estimates as to the rates for the next six months about April 21st and October 21st. I do recommend that everyone sign-up for these. They are free,and give you one more valuable information source to be included in your total investment package.

DM

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