Gyroscopic Investing

With all the forum troubles recently, it doesn't look like the latest I-Bond rate has been posted.

Here it is:

The composite rate for I bonds issued from May 1, 2016, through October 31, 2016, is 0.26%

Fixed rate 0.10%

Semiannual inflation rate 0.08%

Not much to get excited about here but I guess this means inflation is low, right?

Right!
Thanks for the post.
I've been sticking with 3-YR notes these past few years.
But, I have a home equity loan at ~3.5% 

Desert wrote: I won't sit in I bonds at these rates.  I realize I might regret that at some point, but with CD's available paying 2+ percent, I just can't do it. 

I'm getting a NA for the rate in Bond Wizard.  Lame!

I haven't bought I Bonds in a while.  I decided to limit them + > 1 year Treasuries to 1/3 of the cash allocation, so it will be a while before they come up again.

On the plus side, I got my Treasury direct account unlocked just by calling again and getting someone sympathetic to give me hints about the answers I'd picked for security questions.  One of them was pretty humorous and the person was laughing about it the whole time, which I guess is why she was so helpful!  Good to keep in mind, and SO glad to bypass the whole medallion signature thing.

Desert wrote: And Dualstow, kill that 3.5% Home equity loan!  Are you in a position to deduct all the interest, or just a portion?  In any case, it's difficult to obtain an equivalent return anywhere else in the fixed income space.

I agree. I-Bonds suck right now. Treasury yield sucks. My best muni fund no longer matches the loan's rate.
I should just pay it off today, but that would take up most of my cash allocation, which is also my emergency cash.

No deduction.

{ Sorry for the hijack } Back to I-bonds.

Edit: Sophie, you lucked out! Good work on the social engineering. I wasn't able to charm the guy into a hint when I was locked out.

Dualstow - I'd pay that 3.5% non-deductible sucker off as fast as possible.  Way better than an I Bond (see this IS related to I Bonds :-) and possibly better than the average PP return in a near zero inflation environment, after taxes.

A 3 year Treasury, held to maturity, makes a lot more sense than I Bonds right now for deep cash.  I have no plans to sell the ones I've got though.  At some point the steady march to 2% inflation will resume and I Bonds will once again reign supreme. Plus, enough interest has accumulated that I'm not anxious to get the tax bill right now.

I guess I was previously hoping that interest rates would rise. It's only a ten-year loan. You're right, Sophie.

I thought the arguments for I-bonds were:

1. As debt instruments of the USA, there is no default risk, no worry about FDIC funding levels
2. should inflation ('what's inflation, Grandpa?") ever return, the yield would also re-inflate

Therefore, I don't think they totally compete against banks CDs. They're not the same.

I will be buying I-bonds for a couple of more years, but then I'll stop, I'll be full up.