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I have two 10,000 I-bonds bought in 2001. Each has earned about $4,220 during that time. Since I can cash out now without penalty, should I and put them into some other fixed income vehicle?

Sumap
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I have two 10,000 I-bonds bought in 2001. Each has earned about $4,220 during that time. Since I can cash out now without penalty, should I and put them into some other fixed income vehicle?

If you can get an assured yield of inflation+3.0%, then yes, otherwise no.
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If you can get an assured yield of inflation+3.0%, then yes, otherwise no.

I see May 2001 at 3% fixed, November 2001 at 2% fixed. I'm not sure, with the tax deferred and liquidity advantages that even at 2% there is anything attractive enough at the moment to cash out (Pen Fed 5% CD, for example), but 2% is a lot easier to consider other options for. 3% is going to take a while to beat.

http://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm
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<<If you can get an assured yield of inflation+3.0%, then yes, otherwise no.>>

I see May 2001 at 3% fixed, November 2001 at 2% fixed. I'm not sure, with the tax deferred and liquidity advantages that even at 2% there is anything attractive enough at the moment to cash out (Pen Fed 5% CD, for example), but 2% is a lot easier to consider other options for. 3% is going to take a while to beat.

http://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm


The OP is discussing bonds that were purchased in September of 2001, thus they carry the 3% fixed rate. Those have accrued $4220 of interest as of this month. And I agree that 3% is going to take a while to beat (in treasury backed bonds, at least).

Interestingly enough, I also purchased $20k of those 3% fixed rate I-bonds in October of 2001. I tried to purchase an additional $10k near the end of the month, but they "misplaced" my order! That was back in the "good old days" of being able to purchase savings bonds with a credit card.
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Hi, Sumap
Are you holding your I-bonds in a Treasury-Direct account?
If so, was it easy to log in?
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Are you holding your I-bonds in a Treasury-Direct account?
If so, was it easy to log in?


Do you guys really find it that hard to use this new system? I've been using a codecard for my brokerage account for a while now, so this is just another variation on a familiar theme for me and I haven't had any trouble.

Sure, you have to have the card around, but that's pretty straightforward.

Am I missing something? Are you guys having trouble getting the cards to work?

dan
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Sorry, I bought them at a bank. Nobody knew what they were and had to call "downtown" to find out.

The website says they're earning 5.46%. I'm so ignorant; does that mean 5.46% for the remainder of the 30-year term, or is that going to vary with the rate of inflation.

Sumap
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http://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm

I just re-read your link, and it answered my question about the rate for the life of the bond.
Sumap
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The website says they're earning 5.46%. I'm so ignorant; does that mean 5.46% for the remainder of the 30-year term, or is that going to vary with the rate of inflation.

Look at this board's FAQs for details about how I-bonds work (probably easier than going to the Treasury's site).

You bought I-bonds with a fixed rate of 3%. Then there is an inflation adjustment that is reset every 6 months. Currently (if they are earning 5.46%) the inflation (CPI-U adjustment is 2.46%). This will be reset in May, but your particular I-bonds will get the current inflation adjustment for a full six months, depending on your date of purchase, then will get the next inflation adjustment fo r6 months, and so on.

A guaranteed 3% above CPI-U return on a very low risk fixed-income instrument, even ignoring other advantages of I-bonds, is very good in the current fixed-income context. Historically, 2.7%-2.8% would be about average, so you are slightly above that. The last interest rate cycle peaked at about 2.75%. Brand new 10-year TIPS are at about 1.5% fixed and 5-year TIPS below 1%. The most recent I-bonds have a fixed rate of 1.2%.

I don't know what the future for interest rates will be. Hard headed number crunching says rates should be much higher now and will be even higher later, but various factors keep getting in the way of the most clear cut supply and demand. There may come some time in a few years when the US government is forced to borrow money at rates a risky debtor should pay, at which time real yields will be well over 3% and you can cash out for something better. Or you may find a real Pen Fed fire sale, or something like it, with rates way above what anybody else is paying. Currently there is nothing.
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Do you guys really find it that hard to use this new system? I've been using a codecard for my brokerage account for a while now, so this is just another variation on a familiar theme for me and I haven't had any trouble.

Sure, you have to have the card around, but that's pretty straightforward.

Am I missing something? Are you guys having trouble getting the cards to work?


Not hard per se....just unwieldy.

Splotto
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Hi, dan
>>Do you guys really find it that hard to use this new system?<<
Yes, especially because the T'y has not sent me that goddam card.
-
>>I've been using a codecard for my brokerage account for a while now<<
Which broker is committing this cruelty?
-
>>Am I missing something?<< Please tell us what
disaster the access card will prevent.
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>>Do you guys really find it that hard to use this new system?<<
Yes, especially because the T'y has not sent me that goddam card.
-
>>I've been using a codecard for my brokerage account for a while now<<
Which broker is committing this cruelty?
-
>>Am I missing something?<< Please tell us what
disaster the access card will prevent.


If you don't take internet security seriously, you are going to be in big trouble. Years ago I invested in (and still own my shares in) a microcap named Wave Systems partly because it was the first to understand we were moving to this world of online finance where both real security and convenience were necessary (they were, unfortunately for their investors, years ahead of the curve). Saving your account number and password on the computer then automatically logging on is dangerous. Simple passwords that are easy to remember are dangerous. In fact, the whole password system is dangerous. It is easy for someone who has installed spyware on your computer (commonplace) to track keystrokes as you type in a password. What TDirect is doing is trying to make stealing passwords harder. If you haven't yet received your card, find out why. But using it and using the mouse to click in information instead of typing only takes a few extra seconds compared to typing in a password. If you like to spend time checking your accounts every day, the inconvenience mounts up, but for the occasional transaction, the few extra seconds is not a big deal and anything to enhance security is worth doing. I'm still waiting for the Wave solution, or something like it stolen by Microsoft or Intel (both of whom have partnered with Wave over the years) to be universally adopted.
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I haven't used Treasury Direct.
What is a codecard, and how do you use it?

Bill <---{suddenly feeling ignorant}
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I haven't used Treasury Direct.
What is a codecard, and how do you use it?


Here's the scoop from the Treasury:

http://www.treasurydirect.gov/indiv/help/TDHelp/help_ug_274-SecFeaturesProtectAcctLearnMore.htm

dan
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Thanks Dan.

Bill
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for that reason of security i am trying to use id vault. i am having some problems. but i dont want my pswords stolen by keystroke monitoring.. anyone else stepping up there security ..

tim
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Hi, Loki
What is the ticker symbol for "Wave Systems"?
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Hi, Bill
In your case, ignorance is bliss, indeed.
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What is the ticker symbol for "Wave Systems"?

I think it's WAVX. Here's the web site.

http://www.wavesys.com/

When I put down about $3000 6-7 years ago, they were a genuine home run/strike out investment. I would have thought by now they would either be dead (most likely) or a billion dollar cap or more. They understood the internet as a transactional system for the masses way before anyone else. They were still right, but what's good for the masses ain't good for the big players, so they now just look like a bit player. However, they still probably have the best thing going for security, so look at the Web site for that.
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