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Ask HN: Have you bought I bonds yet? Why not?

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Re: Ask HN: Have you bought I bonds yet? Why not?

#51

Post by freediver »

amilios wrote: post #13
freediver wrote: post #8

The cap of $10,000 makes it not very interesting from an investment standpoint. And while the yield is great on paper, it merely lets you keep up with inflation in practice. There are probably better ways to use $10,000 if that is all you have and you are interested in growing money - online courses come to mind.

Online courses? Do you mean "investing in yourself" per se? Any ideas for growing the money that involve actual investment instruments, if I hypothetically have $10k lying around?

Yes investing in yourself. I said online courses but it can be anything that will make you better equipped for earning much more than $10k.

Re: Ask HN: Have you bought I bonds yet? Why not?

#52

Post by [deleted] »

ceejayoz wrote: post #43
freediver wrote: post #8

The cap of $10,000 makes it not very interesting from an investment standpoint. And while the yield is great on paper, it merely lets you keep up with inflation in practice. There are probably better ways to use $10,000 if that is all you have and you are interested in growing money - online courses come to mind.

Its pretty great from an emergency fund standpoint, though. $30k/couple/year if you buy the extra $5k/person with tax return. After a few years you've got a nice inflation-protected emergency fund you can draw on reasonably quickly in the case of something like a job loss.

[deleted]

Re: Ask HN: Have you bought I bonds yet? Why not?

#53

Post by bombcar »

lotsofpulp wrote: post #41
BbzzbB wrote: post #27

Earlier quoted context omitted.

You're gonna invest that 10k somewhere in all likelihood, a risk free 10% is pretty much unbeatable, it's higher than most high-yielding (and vice) stocks, but without bearing the risk of capital loss. Seems silly to me not to use I-bonds even if the cap is relatively low, sure wish I could (not American).

As other comments have indicated, the time and effort to actually invest the $10k in ibonds is considerable given the difficulty of using the website. I also want my cash to be accessible within a few days, so I prefer FDIC insured savings accounts. For locking up money for months or a year in an ibond, the annual gain compared to a savings accounts is only a maximum of $700 or so. The rest I invest in equities, whic…

It's entirely possible that for a bit more hoop-jumping you could beat the 10% by continually churning where your money is for the signup bonuses; again, not likely actually worth it considering the time.

Re: Ask HN: Have you bought I bonds yet? Why not?

#54

Post by timr »

thrtythreeforty wrote: post #44
timr wrote: post #34

Earlier quoted context omitted.

Yes, I-bonds are a bit of a meme right now, and IMO, overhyped. The other important things to note are that your money is locked for a year from purchase , you incur a penalty (3 months of interest) if you sell before 5 years, and the APY values being quoted are not indexed to inflation. I-bonds issued today yield essentially zero percent after inflation, and this will be true for as long as you hold them. Do not buy…

I-bonds are also a great option if your alternative is holding nothing but cash. This isn't really advisable, but I know people that do, largely due to fear of a decline in value. A guaranteed number-go-up product, even if all it does is tread water in real dollars, is a lot better than a product (bank account) that loses real value every year. For those people, I heartily recommend I-bonds.

I'd argue if you want the equivalent optionality of "cash" and you're buying today, you'd do better to just ladder into short-duration treasuries, or keep it in a high-yield savings account.

I-bonds are really only optimal if you plan on keeping medium-sized chunks of cash around in cold storage for time periods of longer than a year.

Re: Ask HN: Have you bought I bonds yet? Why not?

#57

Post by JauntTrooper »

BbzzbB wrote: post #27
bombcar wrote: post #11

Earlier quoted context omitted.

You can double that and more if you're married, and use the tax refund trick. But the reality is that 10% on 10k isn't a terribly large amount of money at the end of the day.

You're gonna invest that 10k somewhere in all likelihood, a risk free 10% is pretty much unbeatable, it's higher than most high-yielding (and vice) stocks, but without bearing the risk of capital loss. Seems silly to me not to use I-bonds even if the cap is relatively low, sure wish I could (not American).

10% of $10,000 is $1,000, but you have to pay federal income taxes on it.

So you're looking at getting $600 - $800 to tie up $10,000 for a year, and you have to go through hoops and a cumbersome website to do it.

It's a better deal than other fixed income investments right now, but with an after-tax return that's guaranteed to be worse than inflation, it's hard to get excited about it.

Re: Ask HN: Have you bought I bonds yet? Why not?

#58

Post by lotsofpulp »

ceejayoz wrote: post #43
freediver wrote: post #8

The cap of $10,000 makes it not very interesting from an investment standpoint. And while the yield is great on paper, it merely lets you keep up with inflation in practice. There are probably better ways to use $10,000 if that is all you have and you are interested in growing money - online courses come to mind.

Its pretty great from an emergency fund standpoint, though. $30k/couple/year if you buy the extra $5k/person with tax return. After a few years you've got a nice inflation-protected emergency fund you can draw on reasonably quickly in the case of something like a job loss.

If you are married filing joint, it is only $5k per couple.

https://thefinancebuff.com/overpay-taxes-buy-i-bonds-better-...

>The $5,000 maximum is per tax return, not per person. If you’re married filing jointly, you still can buy only a maximum of $5,000 for both of you combined, not $5,000 for each of you.

Re: Ask HN: Have you bought I bonds yet? Why not?

#60

Post by satellite2 »

lotsofpulp wrote: post #41
BbzzbB wrote: post #27

Earlier quoted context omitted.

You're gonna invest that 10k somewhere in all likelihood, a risk free 10% is pretty much unbeatable, it's higher than most high-yielding (and vice) stocks, but without bearing the risk of capital loss. Seems silly to me not to use I-bonds even if the cap is relatively low, sure wish I could (not American).

As other comments have indicated, the time and effort to actually invest the $10k in ibonds is considerable given the difficulty of using the website. I also want my cash to be accessible within a few days, so I prefer FDIC insured savings accounts. For locking up money for months or a year in an ibond, the annual gain compared to a savings accounts is only a maximum of $700 or so. The rest I invest in equities, whic…

Your conclusion is debatable. Europe is mostly a functioning society (and has been for 20+ years) but its equity market has not necessarily beaten the risk free asset (depending on the country). So I would not necessarily correlate a country's equity market perfomance with its well-being.
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