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Author: jacko53 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35387  
Subject: New I bond rate Date: 5/1/2000 11:26 PM
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Note that the rate on the I bond went up today to 7.49%. These look very attractive to me in a taxable account for reducing equity portfolio risk.

The rate of interest is established at the time of purchase and is guaranteed for 30 years. The interest on the I bonds accumulates tax free until you cash them in and even then they are free of state tax. You can't cash the bonds in for the first 6 months after purchase. If you cash them in during the first 5 years you lose 3 months interest. After 5 years you can cash them in without penalty at any time up to 30 years.

These also seem like good investments for childrens' future educational needs, since if used for education you can claim the education tax exclusion for the interest (in effect a totally tax free savings method, assuming your adjusted gross income is low enough). I bonds can be purchased online at www.savingsbonds.com in up to $500.00 increments. (I'm thinking of buying a few thousand dollars worth and racking up some frequent flyer miles.) I think you can also buy them from your bank.

The total annual limit for I bonds is $30,000 per person. Does anyone see any downside to I bonds? The returns seem at least as good as the Vanguard bond index funds.
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Author: ortman Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 612 of 35387
Subject: Re: New I bond rate Date: 5/1/2000 11:45 PM
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Note that the rate on the I bond went up today to 7.49%. These look very attractive to me in a taxable account for reducing equity portfolio risk.

The rate of interest is established at the time of purchase and is guaranteed for 30 years.....

<snip>

The total annual limit for I bonds is $30,000 per person. Does anyone see any downside to I bonds?


Just a note, that's not a fixed rate. It's a mixture of fixed rate and inflation. 3.6% is guaranteed for 30 years. The remaining 3.82% is the inflation rate. This is adusted with inflation. It goes up with inflation, and goes down with inflation. During deflation, the I rate is zero - giving you only the fixed 3.6%.

http://www.publicdebt.treas.gov/com/comi500.htm

-Ortman

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Author: chatdawgie Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 628 of 35387
Subject: Re: New I bond rate Date: 5/6/2000 11:48 AM
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Excuse me, but the interest rate is not guaranteed for thirty years, it's guaranteed for six months!! The new rate will change on NOV 1...

CHAT

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