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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: of 35400  
Subject: Re: I vs E Date: 3/19/2006 4:21 PM
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Mark,

Good reminder on the step-up with EE bonds. At least that makes the CPI-U differential for 20 years with I-bonds 2.4% insted of 2%, with the final 10 years to 30 years a crap shoot.

For the moment, this discussion is purely academic, but if we do see competitive rates in May, it will be worth crunching the numbers, again. I think EE-bonds would need to be over 4% with a step-up to be competive with Treasuries (where they are now), more like 4.25 if you don't expect the 15% tax bracket discount. Not likely. If I-bonds are at my guess of 1.8%, that's plausible versus 2.2% 10-year TIPS (guesswork about rollover in 10 years). Ken's 1.6% I-bonds fixed would be a close call in the right circumstances, but the added liquidity compared the TIPS (in the sense of cashing in without trading risk, after the first year, with no penalty after 5) may make the close call less close.
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