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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: TreasuryDirect Date: 3/18/2006 4:49 PM
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The problem with a May 2005 edition of a book on Savings Bonds is this kind of stuff gets out of date very quicily. A year ago, Savings Bonds were competive with other fixed-income options (everything was very low yields) for large scale long term savings, at least if you were looking at being a much lower tax bracket when you cashed in (e.g., 25% versus 15%). This is not true now (check back in May 2006, it may change again.)

Savings Bonds are still an option for those unable to slam down $1000 at a time for CDs or Treasuries or TIPS, and for emergency funds they are still arguably a viable option. But the fixed yield on I-bonds is not competitive with the fixed yield on TIPS and the fixed yield on EE-bonds is not competitive with CDs or Treasuries, even with tax delay considerations and the possibility of a lower tax bracket in the future (I haven't crunched the numbers for the top couple of brackets, but usually such folks don't do US Savings Bonds and won't be in the 15% bracket in retirement).

As I said, check back in six weeks, though the idea that we will have a much higher fixed rate on I-bonds is pure speculation for the moment.
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