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US Series I Savings Bonds Now Yielding 7.12%

treasurydirect.gov

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Re: US Series I Savings Bonds Now Yielding 7.12%

#51

Post by rajup »

ballenf wrote: post #26
benmanns wrote: post #16

Earlier quoted context omitted.

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).

What stops you selling them to someone else?

Treasury rules? No redeeming for 1 year, and redeeming before 5 years means you lose the last 3 months of interest. You can gift them to other people though.

Re: US Series I Savings Bonds Now Yielding 7.12%

#52

Post by watchdogtimer »

rajup wrote: post #8
johng wrote: post #4

Earlier quoted context omitted.

It’s about as safe an investment you can make and it’s a super high yield.

But the rate is only for 6 months and limited to $10000 per SSN per year, which does not make it terribly useful.

FWIW, you can get purchase[0] up to an additional $5000 a year in paper format if you overpay your Federal income taxes and request the refund be paid as a paper I-bond.

[0] - https://www.treasurydirect.gov/indiv/research/faq/faq_irstax...

Re: US Series I Savings Bonds Now Yielding 7.12%

#53

Post by JumpCrisscross »

ppierald wrote: post #15

I 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.

> the high yield on these bonds reinforces the reality that inflation (whether temporary or long-term) is here

Savings Bonds aren't traded. Their yield is calculated by the Treasury from the non-seasonally adjusted Consumer Price Index for all Urban Consumers (CPI-U) for all items, including food and energy. As such, it offers no more information into the future course of inflation than the CPI-U itself.

The data you're looking for are the 10-year breakeven inflation rates [1], which ares calculated from the premium the market places on the Treasury's tradable inflation-protecting bonds [2] and its tradable standard bonds.

[1] https://fred.stlouisfed.org/series/T10YIE

[2] https://www.treasurydirect.gov/indiv/products/prod_tips_glan...

Re: US Series I Savings Bonds Now Yielding 7.12%

#54

Post by pjc50 »

mc32 wrote: post #41
nwvg_7257 wrote: post #36

This doesn't mean what people think it means. They adjust the inflation rate every 6 months https://www.treasurydirect.gov/indiv/research/indepth/ibonds... . Right now it yields 7.12% because the last inflation number was really high, but once inflation goes back to normal, the yield will be much lower.

Right. The real question is : when will it abate? Is it transitory as they unflinchingly claimed or are we in the Carter Years?

When the real shock of COVID disruption abates. Which is .. not looking great at the moment.

Re: US Series I Savings Bonds Now Yielding 7.12%

#56

Post by edge17 »

ballenf wrote: post #26
benmanns wrote: post #16

Earlier quoted context omitted.

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).

What stops you selling them to someone else?

Nothing, you can buy and sell them in the secondary market.

Re: US Series I Savings Bonds Now Yielding 7.12%

#57

Post by SavantIdiot »

purple_ferret wrote: post #38
SavantIdiot wrote: post #14

Earlier quoted context omitted.

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 th…

These look like a variable rate though that adjusts every 6 months.

Yes, thanks, just updated my post.

Re: US Series I Savings Bonds Now Yielding 7.12%

#59

Post by mikewarot »

mc32 wrote: post #41
nwvg_7257 wrote: post #36

This doesn't mean what people think it means. They adjust the inflation rate every 6 months https://www.treasurydirect.gov/indiv/research/indepth/ibonds... . Right now it yields 7.12% because the last inflation number was really high, but once inflation goes back to normal, the yield will be much lower.

Right. The real question is : when will it abate? Is it transitory as they unflinchingly claimed or are we in the Carter Years?

They called it the Great War, then it was renamed to World War I

They called it the Great Depression, I suspect it's about to get renamed. This is going to suck.

Re: US Series I Savings Bonds Now Yielding 7.12%

#60

Post by LurkingPenguin »

skinnymuch wrote: post #45

The fixed rate is 0% as has been the case. The inflation yield rate has been bouncy. This doesn’t seem as good as the title and comments are making it seem unless things stay this way. Table near bottom of page shows the inflation rate over time. Edit: I agree this could be a sign of something long term Edit: recent history of rates -- Inflation rates -- Nov 2021 3.56% May 2021 1.77% Nov 2020 0.84% May 2020 0.53% Nov…

> This doesn’t seem as good as the title and comments are making it seem unless things stay this way. Table near bottom of page shows the inflation rate over time.

I wouldn't purchase these bonds for a number of reasons, but I do think it's worth noting that the case for today's inflation being something more than "transitory" is stronger than the case for today's inflation being "transitory".

Trying to navigate the environment today while looking in the rearview mirror is a good way to crash your portfolio.

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