Inflation is scaring me even more now.
US Series I Savings Bonds Now Yielding 7.12%
11–20 of 190 posts
Re: US Series I Savings Bonds Now Yielding 7.12%
#12I have an Ally bank account. Over the past couple years, they've been great about religiously informing me of my interest rates dropping to almost zero. I see something like this and just have to laugh. When will I get my increase notification?
Re: US Series I Savings Bonds Now Yielding 7.12%
#13This yield means we are expecting much higher inflation than normal. The 2% target was missed.
Re: US Series I Savings Bonds Now Yielding 7.12%
#14Does anyone want to explain why this is an interesting story?
7% on a bond is very good. 7.2% doubles every 10 years. For those of us getting older with lots of stock assets, we (conservative investors) want to transition to something safe so that smash-and-grab market fluctuation don't make us lose our money in retirement. Tiered bonds are something safe to do when you hit your mid 50's once the "thrill" of investing in what are today called "meme" stocks ("penny stocks" in the 80's/90's) has passed.
EDIT: S1 bonds apparently aren't fixed forever. Thanks Purple_ferret points out that part of the rate changes, as it is based on a fixed rate and the inflation rate. This is why I have an RIA to filter all my decisions.
From the web:
"Inflation rate
Unlike the fixed rate which does not change for the life of the bond, the inflation rate can and usually does change every six months.
We set the inflation rate every six months (on the first business day of May and on the first business day of November), based on changes in the non-seasonally adjusted Consumer Price Index for all Urban Consumers (CPI-U) for all items, including food and energy.
However, the change is applied to your bond every six months from the bond's issue date. (The dates for these changes might not be May 1 and November 1.) When does my bond change rates? "
Re: US Series I Savings Bonds Now Yielding 7.12%
#15I Bonds are inflation protected bonds, so the context here is that the high yield on these bonds reinforces the reality that inflation (whether temporary or long-term) is here.
Re: US Series I Savings Bonds Now Yielding 7.12%
#16I'm kind of an idiot with anything terribly elaborate in the financial world, so forgive a bit of a dumb question: what are the downsides to bonds instead of using something like a CD?
I bonds in particular cannot be cashed out before 12 months, and before 5 years there is a penalty. Bonds are not covered by FDIC insurance and can default (though less relevant for US Treasury bonds which can print USD and more relevant for corporate/foreign bonds).
Re: US Series I Savings Bonds Now Yielding 7.12%
#17I'm kind of an idiot with anything terribly elaborate in the financial world, so forgive a bit of a dumb question: what are the downsides to bonds instead of using something like a CD?
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Re: US Series I Savings Bonds Now Yielding 7.12%
#18Does anyone want to explain why this is an interesting story?
Typical inflation protected bonds pay maybe half this? Because, well, inflation was low.
Now that inflation is higher, returns are higher.
Re: US Series I Savings Bonds Now Yielding 7.12%
#19Is their site right that the maximum yearly purchase is $5k/$10k paper/electronic? That's... not very much.
Yes.
Re: US Series I Savings Bonds Now Yielding 7.12%
#20I have an Ally bank account. Over the past couple years, they've been great about religiously informing me of my interest rates dropping to almost zero. I see something like this and just have to laugh. When will I get my increase notification?
When you go to pull your money out and move it to somewhere offering a better deal.