Are Savings Bonds Suddenly Exciting

Discussion of the Cash portion of the Permanent Portfolio

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Storm
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Are Savings Bonds Suddenly Exciting

Post by Storm »

It's funny that the mainstream financial press is finally catching on to the fact that I-bonds are a great deal!

http://www.smartmoney.com/invest/bonds/ ... 129391456/
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moda0306
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Re: Are Savings Bonds Suddenly Exciting

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I would definitely agree that i-bonds, and even EE bonds to some degree, are extremely exciting.

More in the fact that we could completely ignore the implications back in 2002 of a tax-deferred (or tax-free if used for education) bond with a fixed 30-year rate of return plus CPI, but fully redeemable at face value after a year if conditions warranted it.  It's like some kind of beautiful love-child of a 1-year treasury bill, a TIP, and a 30-year treasury bond.  Some of us were able to see the light, but both myself and as a society we should have been all over these things for at least some of our portfolio. 

The carnival barker financial services industry should have been screaming for people to jump in with at least some of their money, but of course they were too busy selling mutual funds of muni bonds and tech stocks to their clients.

Even now, as risk-free ST rates are in the dumps, something that merely keeps up with CPI in a world of volatile commodities and issues with resource scarcity appears to still be able to handily beat the treasury bond market.
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Lone Wolf
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Re: Are Savings Bonds Suddenly Exciting

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moda0306 wrote: More in the fact that we could completely ignore the implications back in 2002 of a tax-deferred (or tax-free if used for education) bond with a fixed 30-year rate of return plus CPI, but fully redeemable at face value after a year if conditions warranted it.  It's like some kind of beautiful love-child of a 1-year treasury bill, a TIP, and a 30-year treasury bond.  Some of us were able to see the light, but both myself and as a society we should have been all over these things for at least some of our portfolio. 
I think that it had been a very long time since anyone had really viewed cash as an investment.  2008 changed so much.

I'm putting in my order for this year's paper I-bonds at the bank this weekend.  Still riding the fence on the EE's.
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MediumTex
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Re: Are Savings Bonds Suddenly Exciting

Post by MediumTex »

I was watching a rap video the other day and the guy was holding a stack of I-bonds.
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Lone Wolf
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Re: Are Savings Bonds Suddenly Exciting

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MediumTex wrote: I was watching a rap video the other day and the guy was holding a stack of I-bonds.
Indeed.  Hanging out with a PP adherent at the club is sure to make for a pimptastic evening.  We're always the ones who show up wearing leather chaps and a gold medallion the size of a manhole cover while we "make it rain" I-series savings bonds and long-term US Treasury securities.

At least this is what I will tell myself when I'm standing in line with all the grandmas to purchase savings bonds.
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moda0306
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Re: Are Savings Bonds Suddenly Exciting

Post by moda0306 »

MT & LW,

Hilarious!

And LW, at 3% + inflation for 30-years, I-bonds shouldn't have been looked at as simple cash... maybe some kind of st/lt hybrid with a lot of the strengths of both instruments with very few weaknesses.
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."

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smurff
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Re: Are Savings Bonds Suddenly Exciting

Post by smurff »

The personal finance writers seem to discover savings bonds every five or six years, wax rhapsodic, then forget about them for another five or six years when the general public does not bite, because they're biting into something else.  The last time savings bonds were a big deal with investment writers was around 2005, if I remember approximately, when the real estate bubble was expanding in preparation for a big bust up.  (Almost) no one with money in 2005 was going to buy I-bonds at 5% when they believed they could double their money in 90 days by overpaying for a Florida condo. 

And admit it--the Treasury Department does not do a good job of marketing savings bonds as legitimate permanent parts of an investor's portfolio, as opposed to minor savings devices that grand parents start buying for their grand kids every birthday so they can cash them all in one day for a dirt bike.  They really do have this image, and it's a problem.
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