I really don't think there is any way the I Bond fixed rate will go up in November, but there is some chance it will hold at 1.3%, or more probably 1.2%. But I think it will definitely hold above 1.0%. (My speculation, for what that is worth.)
I have been battling with the question of how much worse I-bond fixed rates have to be compared with TIPS yields before I will buy I-bonds again.
I settled on the arbitrary number of 0.5%....not via any logic, just because I had to pick something.
I have about $25K worth of TIPS maturing in October, and the question for me has been whether to buy more 2040 TIPS with the proceeds or buy $20K worth of I-bonds at 1.3% fixed.
I thought recent declining TIPS yields sort of settled the question in favor of I-bonds, but today the 2040 TIPS barely broke the 1.8% threshold.
What to do....what to do.... (Ultimately it probably doesn't matter.)
I'm curious if you have a personal threshold, what it is and why (if there is a "why", or if it is as arbitrary as mine).
I would be very surprised if I-bond fixed rates go up in November, but I suppose anything could happen.
But look at this current 1.3% fixed rate. As of today's market close, it is 16 basis points below the 5-year TIPS and 31 below the 10-year. The I Bond is actually attractive today, given its advantages of deferred taxation, rock solid deflation protection, and flexible maturity date. It can never lose a penny of value. At this point, an I Bond is a more attractive investment than a 5-year TIPS, definitely, and I'd say the 10-year, too, unless you want to speculate and trade out of the TIPS in the future for a capital gain.
Statistics: Posted by tipswatcher — Wed Sep 25, 2024 8:31 pm