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Posted: 9/20/2022 4:13:59 PM EDT
[#1]
I purchased 10k I bond on 2/01/2022 but the value is only 10,236.00. It should be worth more if the last interest rate cycle was 7.12 and the current one is 9.62. What am I doing wrong? Am I missing something or just bad at math?
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Posted: 9/20/2022 4:15:20 PM EDT
[#2]
Quote HistoryQuoted: I purchased 10k I bond on 2/01/2022 but the value is only 10,236.00. It should be worth more if the last interest rate cycle was 7.12 and the current one is 9.62. What am I doing wrong? Am I missing something or just bad at math? The way the return is calculated is convoluted. I haven't researched it enough to know. |
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Posted: 9/20/2022 4:20:43 PM EDT
[#3]
Quote HistoryQuoted: I believe this is correct. There are ways to get it up to $15k, but it's still a miniscule amount. There are also some strings attached, and the interest rate is only guaranteed for 6 mos. and then it re-adjusts IIRC. https://www.wtae.com/article/i-bonds-should-you-invest-in-them-heres-what-financial-planners-say/40061857# Essentially, ibonds are for the poors who have limited resources to invest. If you have a large portfolio, they don't help much. Quote HistoryQuoted: Quoted: Since the halcyon years of the stock market are over, everyone is trying to preserve cash value, using different strategies. So you are doing the smart thing. Correct me if I am wrong, but I-bond purchases are limited to $10,000 a year and cannot be held in a traditional IRA or Roth IRA. Correct? Anyone? I believe this is correct. There are ways to get it up to $15k, but it's still a miniscule amount. There are also some strings attached, and the interest rate is only guaranteed for 6 mos. and then it re-adjusts IIRC. https://www.wtae.com/article/i-bonds-should-you-invest-in-them-heres-what-financial-planners-say/40061857# Essentially, ibonds are for the poors who have limited resources to invest. If you have a large portfolio, they don't help much. Thanks. I thought I was missing something with all the talk about I-Bonds. They are of no help to me. I can't think of anywhere to go with cash except bonds or CD's. No to stock market No to Gold No to Real estate I still have a lot in the market as a hedge. But the ride is over. Perhaps when a happy meal hits $10 and gas goes to $10/gallon people will wake up. But I doubt it. It will be blamed on "supply chain issues" like you say. Or some other nonsense. But not the government policies. We are in a text book recession right now with two consecutive quarters of a negative GDP. But according to the experts, we are not. Recession has been redefined, just like gender, marriage, and everything else. Doesn't matter, because we are going to skip over recession and go straight to depression. Connect the dots. Its dead ahead. |
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Posted: 9/20/2022 4:24:24 PM EDT
[#4]
Quote HistoryQuoted: Thanks. I thought I was missing something with all the talk about I-Bonds. They are of no help to me. I can't think of anywhere to go with cash except bonds or CD's. No to stock market No to Gold No to Real estate I still have a lot in the market as a hedge. But the ride is over. Perhaps when a happy meal hits $10 and gas goes to $10/gallon people will wake up. But I doubt it. It will be blamed on "supply chain issues" like you say. Or some other nonsense. But not the government policies. We are in a text book recession right now with two consecutive quarters of a negative GDP. But according to the experts, we are not. Recession has been redefined, just like gender, marriage, and everything else. Doesn't matter, because we are going to skip over recession and go straight to depression. Connect the dots. Its dead ahead. Sitting in cash is a loser due to inflation, but I feel your pain. Don't know where to go, hence this thread. If we are at or near a top in interest rate increases, bonds seem like a good place to park some $. But I really don't know. |
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Posted: 9/20/2022 4:35:22 PM EDT
[#5]
Quote HistoryQuoted: I purchased 10k I bond on 2/01/2022 but the value is only 10,236.00. It should be worth more if the last interest rate cycle was 7.12 and the current one is 9.62. What am I doing wrong? Am I missing something or just bad at math? I believe the bond value reflects the 3 month interest penalty for the first 5 years. So you're seeing 4 months of interest at 7.12%. |
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Posted: 9/20/2022 4:40:37 PM EDT
[#6]
My word is my Bond
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Posted: 9/20/2022 4:50:12 PM EDT
[#7]
Quote HistoryQuoted: Sitting in cash is a loser due to inflation, but I feel your pain. Don't know where to go, hence this thread. If we are at or near a top in interest rate increases, bonds seem like a good place to park some $. But I really don't know. Quote HistoryQuoted: Quoted: Thanks. I thought I was missing something with all the talk about I-Bonds. They are of no help to me. I can't think of anywhere to go with cash except bonds or CD's. No to stock market No to Gold No to Real estate I still have a lot in the market as a hedge. But the ride is over. Perhaps when a happy meal hits $10 and gas goes to $10/gallon people will wake up. But I doubt it. It will be blamed on "supply chain issues" like you say. Or some other nonsense. But not the government policies. We are in a text book recession right now with two consecutive quarters of a negative GDP. But according to the experts, we are not. Recession has been redefined, just like gender, marriage, and everything else. Doesn't matter, because we are going to skip over recession and go straight to depression. Connect the dots. Its dead ahead. Sitting in cash is a loser due to inflation, but I feel your pain. Don't know where to go, hence this thread. If we are at or near a top in interest rate increases, bonds seem like a good place to park some $. But I really don't know. Yup. Cash is a loser. But a bigger loser is having everything in the stock market. All one can do is stay diversified. Update - just looked, a 6 month CD at 3.90% is beating a US treasury at 3.82%. https://fixedincome.fidelity.com/ftgw/fi/FILanding |
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Posted: 9/20/2022 4:59:54 PM EDT
[#8]
Quote HistoryQuoted: I believe the bond value reflects the 3 month interest penalty for the first 5 years. So you're seeing 4 months of interest at 7.12%. That math works out. Thank you |
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Posted: 9/20/2022 5:34:30 PM EDT
[#9]
Quote HistoryQuoted: I thought the title said "bombs"...  I thought NODS. Yes, definitely time to buy NODS |
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Posted: 9/20/2022 5:44:23 PM EDT
[#10]
Why did so many vote it’s never a good time?
What am I missing? |
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Posted: 9/20/2022 5:44:52 PM EDT
[#11]
Buy undervalued stocks for pennies on a dollar
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Posted: 9/20/2022 5:56:25 PM EDT
[#12]
Quote HistoryQuoted: Why did so many vote it’s never a good time? What am I missing? Because for about the last 25 years we have been riding the golden bull stock market where yearly returns often exceeded 30%. So, the best place for your money was the US stock market. CD's and bonds performed poorly in comparison. Many are thinking the stock market will be back. But that may be "irrational exuberance." Paging Mr. Greenspan. |
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Posted: 9/20/2022 6:18:58 PM EDT
[#13]
Quote HistoryQuoted: That is correct. I'm moving over 10K and the wife is moving over 10K Quote HistoryQuoted: Quoted: Since the halcyon years of the stock market are over, everyone is trying to preserve cash value, using different strategies. So you are doing the smart thing. Correct me if I am wrong, but I-bond purchases are limited to $10,000 a year and cannot be held in a traditional IRA or Roth IRA. Correct? Anyone? That is correct. I'm moving over 10K and the wife is moving over 10K 10k per calendar year, 5k as a tax refund and you can gift eachither another 10k plus all your kids you can buy for them. The gift box starts earning interest day 0 when you buy it but the person can't accept the gift if they already bought that year. Basically this pushes it out to the following calendar year to liquidate but earns right away. A couple can easily by jan1 of next year have 60k in |
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Posted: 9/20/2022 6:21:07 PM EDT
[#14]
Quoted: The Fed is meeting this week and is expected to raise rates by 0.75% (or maybe 1%, tops). Will it be enough to tame inflation? If they manage to bring inflation to heel, it would be a good time to buy new issue bonds, or bond funds. Is now the time, or soon? I like bonds. I think everyone should have some in their portfolio.   |
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Posted: 9/20/2022 6:24:53 PM EDT
[#15]
Quote HistoryQuoted: Because for about the last 25 years we have been riding the golden bull stock market where yearly returns often exceeded 30%. So, the best place for your money was the US stock market. CD's and bonds performed poorly in comparison. Many are thinking the stock market will be back. But that may be "irrational exuberance." Paging Mr. Greenspan. Quote HistoryQuoted: Quoted: Why did so many vote it’s never a good time? What am I missing? Because for about the last 25 years we have been riding the golden bull stock market where yearly returns often exceeded 30%. So, the best place for your money was the US stock market. CD's and bonds performed poorly in comparison. Many are thinking the stock market will be back. But that may be "irrational exuberance." Paging Mr. Greenspan. Accurate |
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Posted: 9/20/2022 6:52:29 PM EDT
[#16]
I-bonds, take advantage of the annualized rate of 9.62%. It's looking like the November rate will be about 6% annualized.
If you and your spouse have maxed out your personal $10,000 limit, you can buy another $10k for each other as a gift. There are stipulations and such with the gifts, so DYOR. |
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Posted: 9/20/2022 6:53:23 PM EDT
[#17]
Quote HistoryQuoted: I'm betting 100-basis-point increase by the way CD rates have spiked. A one year CD is now at 4%. Not by me. 13 month at 2.1% |
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Posted: 9/20/2022 6:54:18 PM EDT
[#18]
Quote HistoryQuoted: I put some money into I bonds yesterday. Just figured why let the cash sit and lose value. Too bad I can only invest 10K a year in I bonds |
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Posted: 9/20/2022 6:55:17 PM EDT
[#19]
Quote HistoryQuoted: Accurate Quote HistoryQuoted: Quoted: Quoted: Why did so many vote it’s never a good time? What am I missing? Because for about the last 25 years we have been riding the golden bull stock market where yearly returns often exceeded 30%. So, the best place for your money was the US stock market. CD's and bonds performed poorly in comparison. Many are thinking the stock market will be back. But that may be "irrational exuberance." Paging Mr. Greenspan. Accurate How about this: October 27 - Gross Domestic Product, 3rd Quarter 2022 (Advance Estimate) --Will be slightly positive. Current projection = .3% This will be celebrated! Shout it out. No recession! We've turned the corner! Blue skies ahead! Biden is the best!!!!! November 8, 2022 - Midterm elections November 30 - Gross Domestic Product (Second Estimate) and Corporate Profits (Preliminary), 3rd Quarter 2022 - OH NO! Its revised downward. Its negative. We are in a recession after all! |
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Posted: 9/20/2022 7:08:02 PM EDT
[#20]
Quote HistoryQuoted: Not by me. 13 month at 2.1% Get an account at Fidelity. They are offering CDs at MUCH higher rates than that. I just bought a 3-month at 3.2%. Note that the bond yield curve is still inverted, or nearly so. So, going out farther doesn't mean you will get much higher rates. An inverted yield curve means recesssion is on the horizon, historically. It's been inverted for a while now. |
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Posted: 9/20/2022 7:08:52 PM EDT
[#21]
Quote HistoryQuoted: How about this: October 27 - Gross Domestic Product, 3rd Quarter 2022 (Advance Estimate) --Will be slightly positive. Current projection = .3% This will be celebrated! Shout it out. No recession! We've turned the corner! Blue skies ahead! Biden is the best!!!!! November 8, 2022 - Midterm elections November 30 - Gross Domestic Product (Second Estimate) and Corporate Profits (Preliminary), 3rd Quarter 2022 - OH NO! Its revised downward. Its negative. We are in a recession after all! Those damn Rethuglicans did this! All because they got elected! |
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Posted: 9/20/2022 7:16:58 PM EDT
[#22]
Bonds are doing terrible. We’re stepping into a new world where both ends of the investment spectrum are doing terrible.
Welcome to the thunder dome. |
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Posted: 9/20/2022 7:20:03 PM EDT
[#23]
Quote HistoryQuoted: Bonds are doing terrible. We’re stepping into a new world where both ends of the investment spectrum are doing terrible. Welcome to the thunder dome. people bought into the sham that a 60/40 portfolio was "diversified." The reality is that the longer you hold bonds (excluding savings bonds) the higher the correlation they have to the stock market. |
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Posted: 9/20/2022 7:26:00 PM EDT
[#24]
Quote HistoryQuoted: people bought into the sham that a 60/40 portfolio was "diversified." The reality is that the longer you hold bonds (excluding savings bonds) the higher the correlation they have to the stock market. That's the beauty of bond funds. Old bonds are retired and new bonds are purchased reflecting the new reality. The NAV goes up and down, but they keep throwing off interest on the regular. I have never bought individual bonds, but I have owned many bond funds with some success. |
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Posted: 9/20/2022 7:30:32 PM EDT
[#25]
Quote HistoryQuoted: Bonds are doing terrible. We’re stepping into a new world where both ends of the investment spectrum are doing terrible. Welcome to the thunder dome. Recently, in the Age of Brandon, they have been terrible. The point ITT is whether we are at or near peak interest rates. I watch the market closely, and I'm getting mixed signals. On the side of higher rates going forward is the Fed's "Prime Directive" of crushing inflation at all cost. On the side of lower rates in the future is the (hopefully) political thrashing the Dems are going to get in Nov. There will be a lot of pressure on the Fed to lower rates so that housing and other goods are more affordable leading up to 2024. I do not envy the Fed. Their nuts are in a vise. |
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Posted: 9/20/2022 7:43:27 PM EDT
[#26]
No there’s always better ways to invest money than bonds.
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Posted: 9/20/2022 7:54:07 PM EDT
[#27]
Quote HistoryQuoted: I just bought a 3-month CD for 3.2%. Rates are going up. Can they go up forever? Where's the peak? Are we near it? That's the point ITT. If we are at or near the peak, it's time to buy bonds. Or CDs, if your risk tolerance is lower. We are nowhere near the peak. Add 10% to that 3.2% |
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Posted: 9/20/2022 8:02:25 PM EDT
[#28]
Quote HistoryQuoted: That's the beauty of bond funds. Old bonds are retired and new bonds are purchased reflecting the new reality. The NAV goes up and down, but they keep throwing off interest on the regular. I have never bought individual bonds, but I have owned many bond funds with some success. Quote HistoryQuoted: Quoted: people bought into the sham that a 60/40 portfolio was "diversified." The reality is that the longer you hold bonds (excluding savings bonds) the higher the correlation they have to the stock market. That's the beauty of bond funds. Old bonds are retired and new bonds are purchased reflecting the new reality. The NAV goes up and down, but they keep throwing off interest on the regular. I have never bought individual bonds, but I have owned many bond funds with some success. Why pay the fee when you can roll your own? |
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Posted: 9/20/2022 8:03:30 PM EDT
[#29]
Quote HistoryQuoted: No there’s always better ways to invest money than bonds. There isn't "always" thats ignorant. |
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Posted: 9/20/2022 8:03:52 PM EDT
[#30]
Quoted: The Fed is meeting this week and is expected to raise rates by 0.75% (or maybe 1%, tops). Will it be enough to tame inflation? If they manage to bring inflation to heel, it would be a good time to buy new issue bonds, or bond funds. Is now the time, or soon? I like bonds. I think everyone should have some in their portfolio. Why would you buy bonds when rates are about to rise? That will devalue existing bonds paying a lower rate. |
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Posted: 9/20/2022 8:15:03 PM EDT
[#31]
Quote HistoryQuoted: Why would you buy bonds when rates are about to rise? That will devalue existing bonds paying a lower rate. Other than I-bonds, I would be buying bills less than a year, though 1Mo and 3Mo would be my preference. I'm not right now since I haven't maxed out my I bonds for the year. But it's a better place to park your emergency fund than in a savings account. Also, T-bills are currently paying an interest rate much higher than my mortgage rate, even after taxes. So anything extra I would put towards the principal will be going to T-bills and letting the treasury pay my mortgage interest and then some after I max out I bonds. |
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Posted: 9/20/2022 8:22:18 PM EDT
[#32]
Quote HistoryQuoted: Since the halcyon years of the stock market are over, everyone is trying to preserve cash value, using different strategies. So you are doing the smart thing. Correct me if I am wrong, but I-bond purchases are limited to $10,000 a year and cannot be held in a traditional IRA or Roth IRA. Correct? Anyone? Correct though you can buy an additional $5k each year with your income tax refund on top of the $10k. You probably wouldn't want to hold them in a tax-sheltered account anyway since you only pay federal taxes on the interest. You can also hold them forever and leave them to heirs. |
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Posted: 9/20/2022 8:24:42 PM EDT
[#33]
Wait until interest rates reach double digits
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Posted: 9/20/2022 8:47:34 PM EDT
[#34]
Quote HistoryQuoted: Why would you buy bonds when rates are about to rise? That will devalue existing bonds paying a lower rate. Bruh, look at the yield curve. The short end is paying as well as the long. You can go pretty short, not much risk in a 3 month. |
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Posted: 9/20/2022 8:48:40 PM EDT
[#35]
Quote HistoryQuoted: Wait until interest rates reach double digits Wouldn't it be better to buy bonds before they hit double digits so that you're in the 5 year cycle when it happens? |
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Posted: 9/20/2022 8:55:08 PM EDT
[#36]
Quote HistoryQuoted: I'm betting 100-basis-point increase by the way CD rates have spiked. A one year CD is now at 4%. Can you let us know where this CD for 4% is? |
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Posted: 9/20/2022 8:58:17 PM EDT
[#37]
Quote HistoryQuoted: Accurate Quote HistoryQuoted: Quoted: Quoted: Why did so many vote it’s never a good time? What am I missing? Because for about the last 25 years we have been riding the golden bull stock market where yearly returns often exceeded 30%. So, the best place for your money was the US stock market. CD's and bonds performed poorly in comparison. Many are thinking the stock market will be back. But that may be "irrational exuberance." Paging Mr. Greenspan. Accurate Actually, at least in regards to the description of the golden bull market, it's not https://www.macrotrends.net/2526/sp-500-historical-annual-returns I've got a number of short positions making 52 week lows and I keep finding more targets. It's actually been a bit shocking to find that entire industries have been largely running on vc funding and/or 0% interest rates for years. |
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Posted: 9/20/2022 9:04:50 PM EDT
[#38]
Quote HistoryQuoted: Wouldn't it be better to buy bonds before they hit double digits so that you're in the 5 year cycle when it happens? Quote HistoryQuoted: Quoted: Wait until interest rates reach double digits Wouldn't it be better to buy bonds before they hit double digits so that you're in the 5 year cycle when it happens? Uhhhh no. What are you talking about. |
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Posted: 9/20/2022 9:06:34 PM EDT
[#39]
Quote HistoryQuoted: Actually, at least in regards to the description of the golden bull market, it's not https://www.macrotrends.net/2526/sp-500-historical-annual-returns I've got a number of short positions making 52 week lows and I keep finding more targets. It's actually been a bit shocking to find that entire industries have been largely running on vc funding and/or 0% interest rates for years. Quote HistoryQuoted: Quoted: Quoted: Quoted: Why did so many vote it’s never a good time? What am I missing? Because for about the last 25 years we have been riding the golden bull stock market where yearly returns often exceeded 30%. So, the best place for your money was the US stock market. CD's and bonds performed poorly in comparison. Many are thinking the stock market will be back. But that may be "irrational exuberance." Paging Mr. Greenspan. Accurate Actually, at least in regards to the description of the golden bull market, it's not https://www.macrotrends.net/2526/sp-500-historical-annual-returns I've got a number of short positions making 52 week lows and I keep finding more targets. It's actually been a bit shocking to find that entire industries have been largely running on vc funding and/or 0% interest rates for years. Lol yeah l, its a super cycle. PEPs been laughing at me saying that but its coming true. A large amount of businesses don't work with interest rates off the floor. Within 2 years the majority will have reset. Bye bye |
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Posted: 9/20/2022 9:12:14 PM EDT
[#40]
Quote HistoryQuoted: Wait until interest rates reach double digits Nobody believes this. The economy will be in deep recession before that happens. It's close now, based on the inverted yield curve and other metrics. See my previous post. |
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Posted: 9/20/2022 9:13:40 PM EDT
[#41]
Quote HistoryQuoted: Bruh, look at the yield curve. The short end is paying as well as the long. You can go pretty short, not much risk in a 3 month. This is correct. Yield curve has been inverted, or nearly so, for months. Bad news for the economy, possibly good news for purchasing new bonds if the Fed is forced to lower rates. |
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Posted: 9/20/2022 9:14:48 PM EDT
[#42]
Quote HistoryQuoted: Why would you buy bonds when rates are about to rise? That will devalue existing bonds paying a lower rate. The market has already factored in the expected rate increase this week. The question is, will rates continue to rise? Dunno. My crystal ball is cloudy. |
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Posted: 9/20/2022 9:15:52 PM EDT
[#43]
Quote HistoryQuoted: Why pay the fee when you can roll your own? Fees are low on govt. bond funds and they provide a diversity level that I can't achieve on my own. Fees are higher on corp bond funds, as expected. |
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Posted: 9/20/2022 9:19:36 PM EDT
[#44]
Quote HistoryQuoted: Lol yeah l, its a super cycle. PEPs been laughing at me saying that but its coming true. A large amount of businesses don't work with interest rates off the floor. Within 2 years the majority will have reset. Bye bye Low interest rate is a drug. Some businesses be jonesing, man.  Attached File |
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Posted: 9/20/2022 9:29:27 PM EDT
[#45]
Series I Bonds. Great way to accumulate $100,000 over time. Currently at 9.6%.
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Posted: 9/20/2022 9:30:48 PM EDT
[#46]
Quote HistoryQuoted: Can you let us know where this CD for 4% is? Quote HistoryQuoted: Quoted: I'm betting 100-basis-point increase by the way CD rates have spiked. A one year CD is now at 4%. Can you let us know where this CD for 4% is? https://fixedincome.fidelity.com/ftgw/fi/FILanding |
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Posted: 9/20/2022 9:30:59 PM EDT
[#47]
War Bonds? Yes, lol.
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Posted: 9/20/2022 9:49:23 PM EDT
[#48]
Quote HistoryQuoted: Series I Bonds. Great way to accumulate $100,000 over time. Currently at 9.6%. Currently, yes. But everything reverts to the mean, eventually. The mean for bonds is waaaaay less than 9.6%. The mean for U.S. stock is, what, 8%? This is not an argument against ibonds, BTW. They are currently great if you have a small amount to invest. |
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Posted: 9/20/2022 9:57:05 PM EDT
[#49]
Quote HistoryQuoted: Nobody believes this. The economy will be in deep recession before that happens. It's close now, based on the inverted yield curve and other metrics. See my previous post. Quote HistoryQuoted: Quoted: Wait until interest rates reach double digits Nobody believes this. The economy will be in deep recession before that happens. It's close now, based on the inverted yield curve and other metrics. See my previous post. True, but.... Inflation isn't moderating even as we had 2 down GDP quarters.... What if the economy is much worse and inflation is still running hot. The level of uncharted territory with the combination of all these massive long term fuck ups cannot be understated. Only a fool says they know how this will end. Anything is possible. |
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Posted: 9/20/2022 9:58:11 PM EDT
[#50]
6% tax free muni's are attractive
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