Gyroscopic Investing

Gumby wrote:

moda0306 wrote: I think we should petition the treasury for bearer bonds... what an excellent "mattress" instrument.

There are still a few bearer bonds out there that haven't matured yet.

http://www.treasurydirect.gov/govt/repo ... regsec.pdf

"No more of the $24.9 million remaining in unmatured definitive securities (5 CUSIPS) are callable. The next maturities will occur in 2015. The last definitive securities were issued in 1986 and are due to mature in 2016. Approximately 1% or less of the total matured securities are redeemed each month."

Slight correction:  All the bearer bonds have matured.  The last one was issued in 1981.  The $24.9 million in unmatured securities is all in registered securities.  Registered securities are evidenced by a certificate, but the legal owner is whoever is registered in the Treasury records.  A new certificate is issued when the bond is sold -- just like it used to be with stock certificates. 

moda0306 wrote: I want NEWLY issued bearer bonds.  None of these crusty, yellowed 1985 bonds.

But instead of historical figures, I want movie villains like Hans Gruber and Robert DeNiro's character in Heat to be on them.

Hold on a minute, I'll print some up for you!

I don't have a treasury direct account.  Therefore, I think as long as I don't max out my non-treasurydirect portion of I and/or EE bonds I'll just buy them in paper form at the bank.

I would also recommend you max out the paper bonds before going to Treasury direct.  We all have enough of our wealth in the form of 1's and 0's.  It is nice to actually hold something in your hand, other than a periodic statement, for a change.

LGrand85 wrote: Do you all buy your I-Bonds and EE Bonds using Treasury Direct or do you recommend a better way to buy them?

I use both electronic and paper form.  You have a $5,000 paper limit on each type of bond in addition to a $5,000 limit on what you can buy from TreasuryDirect.  Using them both lets you get up to $10,000, if that fits your goals.

The downside of the paper bonds is that you have to wait a bit for them to arrive (and then manage them once they have) but I found them cool.  The other slight downside is that the teller at your bank is likely to be unfamiliar with the process of issuing savings bonds.  In fact, during my last purchase a couple weeks ago, I got the distinct impression that the last person to buy savings bonds at my bank branch was... me 9 months ago. 

In paper form, the process is that you walk up to the bank teller and tell them that you'd like to purchase savings bonds.  You tell them which series (I- or EE-series) you're interested in and they give you a form for each series.  You fill it out, they deduct the funds from your bank account, and Treasury mails you the bonds a few weeks later.

Pkg Man,

I think the paper bonds themselves are much like the birth certificate your mom framed.  I think, in reality, there's just as many 1's and 0's behind actually being able to redeem them.  That said, rather than starting up a treasury direct account, I'd rather hold the paper bond with your very principal in mind in hopes of it being an instrument easier to redeem in the event on some kind of electronic/internet breakdown.

Also, all things being equal, buy them on the last day of a given month.  You still accrue interest on that full month.

Likewise, when redeeming the bond, do it at the beginning of the month.  You still accrue interest for the full month.  That's almost two months of the three month early redemption penalty back in your hands.

I prefer to buy the paper, then mail them in to TreasuryDirect for conversion into electronic.  I know electronic has it's disadvantages, but not being burned up in a house fire is a pretty big advantage to me, compared to a paper bond.

Storm,

I think the paper bonds are really just something to hold on to.  If you lose them there are records of ownership associated with every social security number.

I know it still might be a headache. Just thought I'd let you know.

What's the advantage of doing paper -> electronic instead of just buying them electronic to begin with?

Storm wrote: I prefer to buy the paper, then mail them in to TreasuryDirect for conversion into electronic.

Just curious, are there some reasons why you redeem them via the mail with Treasury versus redeeming them at your bank branch?

Lone Wolf wrote:

Storm wrote: I prefer to buy the paper, then mail them in to TreasuryDirect for conversion into electronic.

Just curious, are there some reasons why you redeem them via the mail with Treasury versus redeeming them at your bank branch?

He is converting them to electronic, not redeeming them, I believe. I also do this, although Treasury Direct handles your converted bonds as a subaccount, rather than as a single account total. Confused me when I first converted paper bonds to electronic.

Incidentally, with the 4.6% rate, I went ahead and bought mine rather than wait until November.

moda0306 wrote: Storm,

I think the paper bonds are really just something to hold on to.  If you lose them there are records of ownership associated with every social security number.

I know it still might be a headache. Just thought I'd let you know.

What's the advantage of doing paper -> electronic instead of just buying them electronic to begin with?

Moda, I think you're right - since they're only redeemable by the purchaser, I'm sure they're tied to your social security number and you could probably get them replaced in the event of losing the paper.

The govt puts a limit of $5k paper bond purchase per person, per year.  Electronic also has a $5k limit.  So, the only advantage to buying both is that you can get a max of $10k per person, per year.  For a married couple this is $20k a year which is great.

Conversion from paper to electronic is just to simplify things and manage it all online, without the risk of losing or forgetting about the paper.  Of course, as someone else mentioned, the TreasuryDirect site is confusing and you have to access your converted bonds in a sub account.  This freaked me out the first time I checked my converted bonds - I thought they might have gotten lost in the mail or something.

moda0306 wrote: Pkg Man,

I think the paper bonds themselves are much like the birth certificate your mom framed.  I think, in reality, there's just as many 1's and 0's behind actually being able to redeem them.  That said, rather than starting up a treasury direct account, I'd rather hold the paper bond with your very principal in mind in hopes of it being an instrument easier to redeem in the event on some kind of electronic/internet breakdown.

Yeah, you're probably correct.  At least it might get you to the head of the line in the event of some sort of breakdown. 

Pkg Man wrote: I would also recommend you max out the paper bonds before going to Treasury direct.  We all have enough of our wealth in the form of 1's and 0's.  It is nice to actually hold something in your hand, other than a periodic statement, for a change.

I went to the bank and bought a bunch of them today.  I like to get a couple of denominations and several in each of those denomination, at the same time.  Why?  because I don't know what value the dollar will have in the future, and if there is a long term Japan-style deflationary episode, $100 might buy in ten years what $1000 can buy today.  (No, I did not look up the Japanese Yen deflation rates.)

Like Pkg Man I prefer paper, too.  And you can order the forms from the Treasury Department (or get extras from your bank) to keep at home so you can fill them out in advance of going to the bank.  They are yellow.

Last year when I bought the bonds, the tellers (one had to help the other) did not quite know how to do it, but they eventually called over an officer who walked them through the process.  This time, the teller who helped me was an expert.  When she finished, she even stacked my paper order on top of a tall pile of I-bond paper orders--I'd never seen that before!  The 4.6% interest has brought out lots of investors who might never have considered savings bonds before.

Be aware that some banks only do paper savings bonds for their own customers, and some banks (including big banks like HSBC and Bank of America in the NYC area) are no longer involved in purchasing paper savings bonds, but they will all redeem them.

That 4.6% + recency bias is why I think the fixed rate will stay at zero.

Pkg Man wrote: I would also recommend you max out the paper bonds before going to Treasury direct.  We all have enough of our wealth in the form of 1's and 0's.  It is nice to actually hold something in your hand, other than a periodic statement, for a change.

Yeah, sometimes paper is kind of cool.  For several years I had several stock certificates, and just last fall deposited the last of them into my brokerage account. 

But realize with paper iBonds, they are a lesser form "wealth" then paper money because at least you can spend paper money at the grocery store or just about any business around town or most persons you might meet on the street.  Try that with an iBond.  The electronic ones are actually easier to "spend."

moda0306 wrote: That 4.6% + recency bias is why I think the fixed rate will stay at zero.

I expect at or near 0 for a long time. 

AgAuMoney wrote: But realize with paper iBonds, they are a lesser form "wealth" then paper money because at least you can spend paper money at the grocery store or just about any business around town or most persons you might meet on the street.  Try that with an iBond.  The electronic ones are actually easier to "spend."

How are they easier to "spend?"

Paper I-bonds can't be spent at all, since they are only redeemable by the purchaser.  I would love to have some of those "bearer bonds" but in the meantime I'll just satisfy myself with all the electronic 1s and 0s.

Don't get me started on the inavailability of bearer bonds.

Mattress cash that earns interest?  Makes you feel a little bit more sympathy for Hans Gruber.

AgAuMoney wrote:

moda0306 wrote: That 4.6% + recency bias is why I think the fixed rate will stay at zero.

I expect at or near 0 for a long time.   :'(

I feel fortunate to have maxed out my annual purchase of .7% fixed rate Ibonds in early 2009.  That would have sounded crazy a few years ago, but sounds great today.

smurff wrote:

AgAuMoney wrote: But realize with paper iBonds, they are a lesser form "wealth" then paper money because at least you can spend paper money at the grocery store or just about any business around town or most persons you might meet on the street.  Try that with an iBond.  The electronic ones are actually easier to "spend."

How are they easier to "spend?"

To spend any iBond you have to convert it to $.  I find it easier to convert an electronic iBond than a paper iBond.

I just purchased my I Bonds for 2011... If rates go up, I may trade these in next year. We'll see.

Looks like you don't need to go to the bank anymore to purchase the paper I Bonds. If you go to TreasuryDirect to order the paper I Bond forms, it now offers a link to SavingsBondsDirect.gov (link below) to print and mail your form, with a check, directly to the Federal Reserve Bank of Minneapolis. The send you the paper bonds back in the mail.

No need to go to the bank anymore!

http://www.treasurydirect.gov/buybonds.htm

Gumby wrote: Looks like you don't need to go to the bank anymore to purchase the paper I Bonds. If you go to TreasuryDirect to order the paper I Bond forms, it now offers a link to SavingsBondsDirect.gov (link below) to print and mail your form, with a check, directly to the Federal Reserve Bank of Minneapolis. The send you the paper bonds back in the mail.

No need to go to the bank anymore!

Beautiful, thanks Gumby!  Great find.

A part of me is going to miss the confused "what the hell is an 'Eye Series'?" look on the teller's face. 

Lone Wolf,

And, ironically, that same teller would/does try to get you into your bank's 1 yr cd at .??% when her manager puts the hard sales pitches on the front burner.

Yet when you ask for an I-bond paying 4.6% for 6 months they look at you like a crazed lunatic.

Went to my local Chase bank this morning and asked about buying I-bonds. The lady asked me, "I or EE"? I said "I" and she got me the form. Filled it out and when processing asked her how often people buy them. She said regularly, mostly older people. She also said that at most other branches they don't do this too often, this branch is an exception...