Is their site right that the maximum yearly purchase is $5k/$10k paper/electronic? That's... not very much.
You can buy as much or as little as you want from your normal broker (schwab, ibkr, fidelity, etc)
US Series I Savings Bonds Now Yielding 7.12%
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Re: US Series I Savings Bonds Now Yielding 7.12%
#727% is likely a negative real rate at the moment.
Cite for that? No one with any expertise has predicted a >7% inflation level that I'm aware of. This sounds like something you got from talk radio.
(Edit: two replies have taken this out of context. Savings bonds have a minimum term of five years (well, without penalty). For them to have a negative yield, we need to see aggregate inflation >7.12% over the next five years. That's nuts, sorry. No one is predicting that.)
Re: US Series I Savings Bonds Now Yielding 7.12%
#73Any real risk in dumping 10k in these and forgetting about it for a decade. Have these ever lost money ? 7% yield is outrageously good assuming you can't lose money. Then again US currency might be worthless if they default on these.
The bonds can go down in value lol
EDIT: Never mind, these are savings bonds and can't be traded
Re: US Series I Savings Bonds Now Yielding 7.12%
#74This 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.
> but once inflation goes back to normal
you mean, once the "inflation number" goes back to normal.
Inflation (supply of money) has been high [0] for literally decades. It won't get lower for a long time. It may never EVER go "back to normal." Normal would put us in a very bad macroeconomic position relative to all other nations. Why would we, the purveyor of the Petrodollar, do that?
Re: US Series I Savings Bonds Now Yielding 7.12%
#75This 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.
It meant what I thought it meant. The adjustable interest rate on these has been much, much better than alternatives for a long time. Now it is even better.
Re: US Series I Savings Bonds Now Yielding 7.12%
#76I 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?
Most savings accounts follow the Federal funds rate ( https://en.wikipedia.org/wiki/Federal_funds_rate ) pretty closely. When it's near zero, so will your savings account be. Chances are your credit card APRs dropped a couple percent over the same time, too ( https://en.wikipedia.org/wiki/Prime_rate ).
Yes, of course, this money isn't the same as that money. I just find the irony hilarious.
Credit card APRs are meaningless to me. I learned the hard way to never hold a balance on them. Yet another financial racket doomed to keep people poor. Those rates are absurd.
Re: US Series I Savings Bonds Now Yielding 7.12%
#77Re: US Series I Savings Bonds Now Yielding 7.12%
#78This is not a great investment. It's pays it's base rate (0.0%) plus inflation (7.12%). The rate is based on inflation and is reset every 6 months, and I'm assuming the base rate of (0.0%) doesn't change. It may make sense for some people who are risk-averse and already have savings in a bank account that is getting demolished by low rates and high inflation.
Re: US Series I Savings Bonds Now Yielding 7.12%
#79Inflation rate is just over 5% so that makes the composite rate -4% (or 0).
CPI is 5% not inflation. If you believe the average American's monthly expenses are only up 5% this year I've got some bridges to sell you
Re: US Series I Savings Bonds Now Yielding 7.12%
#80This 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.
Some interesting charts on this page. The 7.12% rate consists of a 0.00% fixed rate and a 3.56% inflation rate.
The formula is: Composite rate = [fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]
7.12% = [0.0000 + (2 x 0.0356) + (0.0000 x 0.0356)]
This rate is only valid until the inflation rate gets re-adjusted after 6 months. There is an interesting chart showing what the fixed rates and inflation rates have been throughout the history of this bond.
For those considering investing in this, there is a $10,000 max per eligible person. Eligibility includes: 1) United States citizen, whether you live in the U.S. or abroad. 2) United States resident. 3) Civilian employee of the United States, no matter where you live.
Parents can buy these bonds for their children, so a family of four could invest $40k earning 7.12% for at least 6 months. Eligibility requirements are here: https://www.treasurydirect.gov/indiv/research/indepth/ibonds...