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Wow, rare to see a discussion of
I-Bonds IMO most times I bring them up I just get blank stares.
Back in the "good old days" me and the Mrs bought our annual limit of $30,000 per SSN and have the 2001 $60k tranche with a fixed component of 3.0%, the 2003 $60k tranche has a fixed component of 1.1% and the 2005 $60k tranche has a fixed component of 1.0% And yes they are so old they are "paper bonds".
Add to that the current semi-annual inflation rate (CPI-U) 1.38% and you get a yield of : 2001 +5.20%, 2003 +3.35% and 2005 +3.17% and all is "tax deffered" so far. Sometimes I lament having those three plus % returns on those 2003 and 2005 returns so it was comforting to see AnilG say, "No investment will come close to offering risk-adjusted return of those bonds". I think "risk adjusted return" must be the key words there.
Since I do this investing stuff as a "hobby" maybe one of you "smart finance guys" would tell me what you think about my I-Bond returns to date. Note the return gets adjusted every six months so I am just quoting the interest earned over the time I have held the I-Bonds.
1) An Oct 2001 $10,000 I-Bond have earned interest of $11,872 as of 1/1/17 - 15 years + 3 Months or 183 months. Good, bad or average investment.
One of my reference is the gold bullion I bought in the fall of 2001 at $299/oz and is up 400% as today's close at $1,200 an ounce.
2) A July 2003 $10,000 I-Bonds has earned interest of $5,660 as of 1/1/17.
3) A Nov 2005 $10,000 I-Bonds has earned interest of $4,202 as of 1/1/17.
SOMETIMES I FEEL I OVER PAID FOR HAVING THE US GOVERNMENT INFLATION PROOF $180,000 OF MY CASH STASH.
When I did my retirement planning in 2005 I ran senerios at 4%, 6%, 8%, 10% and 12% inflation. LOL
That's what living through the 1970's does to your mind!
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More on the topic of this thread I decided to stop investing in P2P (Propser)in June of 2016 since I had an investment opportunity that did in fact have a 21% return last year. Priority day trading strategy, so sorry can't tell. High "pucker factor" as one might imagine.
I have just been letting my P2P account "decay" naturally and harvest the cash quarterly. So far have withdrawn $38k
The family has two accounts one yielding 10.1% and mine yielding 9.1%
Edit: after reading this full thread, note that the two account are "old" and full of 36 month loans.
All "Debt Consolidation"
A 12%
B 48%
C 28%
Cash 12% which I will pull out at the end of March
So maybe I got "lucky" being "conservative" with my "self directed" selection criteria.
SeattleSun
If inflation is your concern, look into I-series bonds from TreasuryDirect. We max out our allocation of I-series bond every year ($10,000 per SSN per year). You don't have to pay taxes on interest until bond matures or you cash out and interest rate adjusts for inflation every six months.
That seems like a reasonable strategy. I build cash up so quickly in my account and I don't have any good alternatives at the moment for where to deploy it. The latest CPI numbers show inflation seems to be accelerating, so I hesitate to just have cash building up, but I'd much rather that than lose it with a bad investment! A local credit union has CDs for 2.75% with a one-time bump up option, but the terms are 5-years. Just trying to figure out alternatives if I stay on the sidelines.