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Welcome to the Club, JR, A New I-Bond Buyer

yogibearbullyogibearbull
in Other Investing
M* JR compares I-Bonds and 5-Yr TIPS with T-Bills/Notes and reaches favorable conclusions under title, I-Bonds Forever? (Well, no, but still good).

He used 2 long-term scenarios: 1st, since 09/1998 (I-Bond inception) and 2nd, since 01/1995 (when 5-yr TIPS issuance resumed).

For I-Bonds, he used 2 assumptions - the initial 3.4% fixed/base rate and 0% fixed/base rate (to entirely remove that effect). So, this 2nd scenario only captured the CPI effect and actual I-Bond buyers did better than that bottom line.

Unsurprisingly, his conclusions were that that the initial fixed/base rate was a give-away for then (1998) new I-Bonds and those did the best. But 0% I-Bonds also kept up with alternatives. He cautions about their limitations (annual limit, non-tradability) and to keep future expectations reasonable. But not to pass up a good deal, he has just now bought I-Bonds for both his wife and him. Welcome to the club JR!

As has been noted here, these conclusions are not surprising because I-Bonds, and 5-yr TIPS held to maturity, have kept up with $$CPI.

www.morningstar.com/articles/1108848/i-bonds-forever

LINK

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