Warning

 

Close

Confirm Action

Are you sure you wish to do this?

Confirm Cancel
Member Login
Posted: 12/29/2005 4:43:47 PM EDT
The kids received savings bonds as gifts from the grandparents this Christmas which made me start thinking………should I invest in them as well? Is the interest really compounded monthly like the .gov website states?
Link Posted: 12/29/2005 4:45:00 PM EDT
Go with MO
Link Posted: 12/29/2005 4:46:38 PM EDT

Originally Posted By Zippy_The_Wonderdog:
Go with MO



MO what? MO savings bonds or savings bonds with MO face value?
Link Posted: 12/29/2005 4:46:46 PM EDT
Since they barely keep up with inflation, I'm gonna have to go with a big fat no. There are US Govt treasuries that return better than savings bonds, if you are a very risk-averse investor.

Link Posted: 12/29/2005 4:53:42 PM EDT

Originally Posted By PeteCO:
Since they barely keep up with inflation, I'm gonna have to go with a big fat no. There are US Govt treasuries that return better than savings bonds, if you are a very risk-averse investor.




How does the US treasuries deal work?
Link Posted: 12/29/2005 5:01:07 PM EDT
[Last Edit: 12/29/2005 5:02:25 PM EDT by PeteCO]

Originally Posted By QUIB:

Originally Posted By PeteCO:
Since they barely keep up with inflation, I'm gonna have to go with a big fat no. There are US Govt treasuries that return better than savings bonds, if you are a very risk-averse investor.




How does the US treasuries deal work?



It's been a while since I looked at them, but you can buy treasury bills, treasury notes, and long term bonds (30 year). The bonds can be sold prior to maturity. IIRC they yield much better than savings bonds. I *think* there is a minimum amount of $10k to invest in some of them, but my wife does have a long term bond fund Roth IRA through T Rowe Price that has no minimum. Personally, I hold no treasuries.

While I can see keeping some cash for emergencies on hand in a money market account, I can't fathom why anyone would keep the bulk of their money in savings account, in US Savings Bonds, or in CD's. However, during the Great Depression many investors put their money into savings bonds, even though the return was less than inflation. Since so many banks were failing, people looked at the small loss as cheap rent to Uncle Sam for keeping their money safe until the storm blew over. Nowadays you can do the same by keeping gold or holding foreign currency in a foreign bank.
Link Posted: 12/29/2005 5:09:27 PM EDT
Thanks Pete, I'll dig into that more.

Another reason I ask is because my Grandmothers time in her retirement home was funded largely in part with savings bonds my that my Grandfather purchased which my parents cashed in to fund her care.
Link Posted: 12/29/2005 5:09:57 PM EDT
[Last Edit: 12/29/2005 5:15:17 PM EDT by Zippy_The_Wonderdog]
Ummm...no son. This.


finance.yahoo.com/q?d=t&s=MO

Good growth. Good dividends. Gonna split up soon to create North American and International units. The International unit is expected to be paticularly lucrative. Kraft is going to be spun off...which has been holding them back a bit. Court rulings have been going in their favor.

People aren't going to stop smoking anytime soon, and it's a quite addictive product.



Originally Posted By QUIB:

Originally Posted By Zippy_The_Wonderdog:
Go with MO



MO what? MO savings bonds or savings bonds with MO face value?

Link Posted: 12/29/2005 5:16:52 PM EDT
Go with REITs (Real Estate Investment Trust). By law, 90% of taxable profit gets paided out as dividends back to the shareholders. If your goals are long term, look into REITs. Tolerable risks with some good income potential.

Savings Bonds used to be the thing back in our grandfather's days. Like other members said, it barely keeps up with inflation. Plenty of info about REITs on google. I used to invest in a few when I was with www.shareholder.com.
Link Posted: 12/29/2005 5:17:05 PM EDT

Originally Posted By Zippy_The_Wonderdog:
Ummm...no son. This.


finance.yahoo.com/q?d=t&s=MO

Good growth. Good dividends. Gonna split up soon to create North American and International units. The International unit is expected to be paticularly lucrative. Kraft is going to be spun off...which has been holding them back a bit. Court rulings have been going in their favor.

People aren't going to stop smoking anytime soon, and it's a quite addictive product.



Originally Posted By QUIB:

Originally Posted By Zippy_The_Wonderdog:
Go with MO



MO what? MO savings bonds or savings bonds with MO face value?




Link no worky.
Link Posted: 12/29/2005 5:19:50 PM EDT

Originally Posted By QUIB:
Thanks Pete, I'll dig into that more.

Another reason I ask is because my Grandmothers time in her retirement home was funded largely in part with savings bonds my that my Grandfather purchased which my parents cashed in to fund her care.



My grandparents were the same. In their generation, saving money worked, but nowadays we must be more proactive investors seeking a higher return if we are to maintain our lifestyle into retirement. As a nation, we live longer and consume more. Additionally, few people these days retire in the first home they bought, so our house payments last until later in life. Things like guaranteed long term employment and pensions are largely a thing of the past, too.

If you don't know a ton about investing, then you could do worse than buying bonds. They are considered a risk-free investment, and you won't have to endure the inevitable losses by listening to the resident stock market "expert" at work tell you his latest hot tip.

Do invest in your 401k if you have one, and if you can swing the 401k and a Roth IRA so much the better. "Vanilla" investments like an S&P500 Index Fund in your 401k may be boring, but don't forget that they outperform 75% of all other mutual funds out there, year after year. They are a "set it and forget it" reasonably safe investment. The return has historically averaged about 9% as opposed to 3.5% for a Savings Bond.
Link Posted: 12/29/2005 5:20:16 PM EDT
I use EE bonds. They were yielding a higher return than any savings account available. Yields on savings accounts and CDs have just gone up and now they are yielding more than EE bonds. I do it to diversify.
Link Posted: 12/29/2005 5:22:59 PM EDT

Originally Posted By BIKECOP29:
Go with REITs (Real Estate Investment Trust). By law, 90% of taxable profit gets paided out as dividends back to the shareholders. If your goals are long term, look into REITs. Tolerable risks with some good income potential.

Savings Bonds used to be the thing back in our grandfather's days. Like other members said, it barely keeps up with inflation. Plenty of info about REITs on google. I used to invest in a few when I was with www.shareholder.com.



Lost my arse on 2 REITs. I still have them and even though they are my largest dividend stocks, they are my biggest losers. I have lost more money in REITs than I have gained in dividends in them......
Link Posted: 12/29/2005 5:30:19 PM EDT

Originally Posted By Headlice:

Originally Posted By BIKECOP29:
Go with REITs (Real Estate Investment Trust). By law, 90% of taxable profit gets paided out as dividends back to the shareholders. If your goals are long term, look into REITs. Tolerable risks with some good income potential.

Savings Bonds used to be the thing back in our grandfather's days. Like other members said, it barely keeps up with inflation. Plenty of info about REITs on google. I used to invest in a few when I was with www.shareholder.com.



Lost my arse on 2 REITs. I still have them and even though they are my largest dividend stocks, they are my biggest losers. I have lost more money in REITs than I have gained in dividends in them......



Damn. Sorry to hear that. Which ones were they? Were they specialized REITs like mortgage REITs?
Link Posted: 12/29/2005 7:36:07 PM EDT
Over twenty years ago I got them every month as an automatic deduction from work. That was pre-IRA, I think. I haven't had any since I cashed them all in at the end of my first marriage in 1988 in order to furnish my new apartment .
Link Posted: 12/29/2005 7:51:26 PM EDT
[Last Edit: 12/29/2005 7:52:04 PM EDT by mcgredo]
Treasury Direct, www.savingsbonds.gov/indiv/indiv.htm

You can buy treasury bills direct from the government from your checking account. They pay at rates set by the open market auctions. If I remember the current interest rate yield curve right, the bonds pay gradually more up to about 2 years maturity, after which it is almost flat out to ten years. So you gain almost nothing by buying longer maturity instruments.

They also sell i-bonds, which return some set rate above the rate of inflation, I think one or two percent.

The returns aren't all that good, but it's a reasonably good place to park cash and can yield a bit better than a money market fund.

Like anything else, you pays your money and you takes your chances. Stocks are good over the long term but can have large and violent swings. Governmet bonds are the safest investments in the world but have much lower average returns.
Link Posted: 12/29/2005 7:58:43 PM EDT
Government IOUs? Nope.

Let's say you have this uncle that is always wanting to borrow money from you. Out of family loyalty, you loan him the money against an interest bearing marker. He goes further and further into debt each and every year witout fail but he always pays you back on time. When do you say no more? When he fails to pay up and leaves you holding the bag or before he goes belly up?

Hey unk, enough is enough.

IMHO
Link Posted: 12/29/2005 8:00:23 PM EDT
NO! Savings bonds will loose money when tied to the rate of inflation.

3% interest bond X 4% inflation = (1%) return. Not very good math.

Risk=Gain
Gain=Risk

Look into a no load mutual fund that pays a return that outpaces the rate of inflation. At least Certificates of Deposit usually pay an interest rate exceeding inflation...but not by much.
Link Posted: 12/29/2005 8:09:13 PM EDT
Bonds in general are a really bad investment right now.

You lose money on bonds you own if interest rates rise, as the current value of the bond is based on a value at maturity. Yields are NOT keeping up with inflation, yeah they're making a point or so better than the CPI, but the CPI doesn't adequately reflect prices in housing, energy, food, insurance, medical care, etc. Essentially the stuff you really need to pay for.

If you want a safe savings vehicle absolutely nothing beats precious metals in todays market.

Investments are something else entirely, you've either got to be able to pick stocks or invest in yourself, either a business, tools or education.

I don't like the general stock market, real estate, or any debt instruments at these levels.

I do think everyone should have small positions in basic materials, energy, pharma, tech, and defense.

Diversify.

But if you don't have a $1000 bag of US junk silver stashed someplace yet that's what I'd suggest you do first.
Link Posted: 12/29/2005 8:24:40 PM EDT

Originally Posted By pcsutton:
NO! Savings bonds will loose money when tied to the rate of inflation.

3% interest bond X 4% inflation = (1%) return. Not very good math.

Risk=Gain
Gain=Risk

Look into a no load mutual fund that pays a return that outpaces the rate of inflation. At least Certificates of Deposit usually pay an interest rate exceeding inflation...but not by much.



Your statement and calculation is flat out wrong. Look at composite earnings rate calcuations.

http://www.publicdebt.treas.gov/sav/sbirate2.htm

I Bond Interest Rates

I Bond interest rates have two parts:

# A fixed rate that lasts for 30 years
# An inflation rate that changes every six months

FIXED RATES

I bond fixed rates are determined each May 1 and November 1. Each fixed rate applies to all I bonds issued in the six months following the rate determination. For example, a fixed rate determined on May 1, 1999 applies to all I bonds issued from May 1999 through October 1999.
DATE FIXED RATES*
NOV 1, 2005 1.00%
MAY 1, 2005 1.20%
NOV 1, 2004 1.00%
MAY 1, 2004 1.00%
NOV 1, 2003 1.10%
MAY 1, 2003 1.10%
NOV 1, 2002 1.60%
MAY 1, 2002 2.00%
NOV 1, 2001 2.00%
MAY 1, 2001 3.00%
NOV 1, 2000 3.40%
MAY 1, 2000 3.60%
NOV 1, 1999 3.40%
MAY 1, 1999 3.30%NOV 1, 1998 3.30%
SEP 1, 1998 3.40%
*annual rates compounded semiannually

SEMIANNUAL INFLATION RATES

The semiannual inflation rate is determined each May 1 and November 1. It is the percentage change in the Consumer Price Index for all Urban Consumers (CPI-U) over six months. Each semiannual inflation rate applies to all outstanding I bonds for six months.
DATE INFLATION
RATES*
NOV 1, 2005 2.85%
MAY 1, 2005 1.79%
NOV 1, 2004 1.33%
MAY 1, 2004 1.19%
NOV 1, 2003 0.54%
MAY 1, 2003 1.77%
NOV 1, 2002 1.23%
MAY 1, 2002 0.28%
NOV 1, 2001 1.19%
MAY 1, 2001 1.44%
NOV 1, 2000 1.52%
MAY 1, 2000 1.91%
NOV 1, 1999 1.76%
MAY 1, 1999 0.86%
NOV 1, 1998 0.86%
SEP 1, 1998 0.62%
*semiannual rates

COMPOSITE EARNINGS RATES

We combine fixed rates and semiannual inflation rates to determine composite earnings rates. An I bond's composite earnings rate changes every six months after its issue date. For example, the earnings rate for an I bond issued in March 1999 changes every March and September.

EARNINGS RATES THAT BONDS WILL BEGIN EARNING BETWEEN
NOV 2005 AND APR 2006

ISSUE
DATES EARNINGS
RATES*
NOV 2005 - APR 2006 6.73%
MAY 2005 - OCT 2005 6.93%
NOV 2004 - APR 2005 6.73%
MAY 2004 - OCT 2004 6.73%
NOV 2003 - APR 2004 6.83%
MAY 2003 - OCT 2003 6.83%
NOV 2002 - APR 2003 7.35%
MAY 2002 - OCT 2002 7.76%
NOV 2001 - APR 2002 7.76%
MAY 2001 - OCT 2001 8.79%
NOV 2000 - APR 2001 9.20%
MAY 2000 - OCT 2000 9.40%
NOV 1999 - APR 2000 9.20%
MAY 1999 - OCT 1999 9.09%
NOV 1998 - APR 1999 9.09%
SEP 1998 - OCT 1998 9.20%
*annual rates compounded semiannually

HOW WE SET COMPOSITE RATES

Here's how we set the composite rate for I bonds issued Nov 2005 - Apr. 2006:

Fixed rate = 1.00%
Semiannual inflation rate = 2.85%

Composite rate = [Fixed rate + 2 x Semiannual inflation rate + (Fixed rate X Semiannual inflation rate)]
Composite rate = [0.0100 + 2 x 0.0285 + (0.0100 X 0.0285)]
Composite rate = [0.0100 + 0.057 + 0.000285]
Composite rate = [0.067285]
Composite rate = 0.0673
Composite rate = 6.73%

For more info on TIPS and I-Bonds (which compound tax deferred, a big plus) go to http://treasurydirect.gov/indiv/indiv.htm

James
Link Posted: 12/29/2005 8:38:46 PM EDT
I invest $50 a month in series I bonds. It's the conservative part of my diversified portfolio.

Link Posted: 12/29/2005 8:42:09 PM EDT
No, my investments are in equity type funds in the U.S. stock market and international stock funds.

S&P500, Wilshire 4500 and EAFE indexes. (12/1/2004 -11/30/2005)

8.41% 14.64% 13.35%
Link Posted: 12/29/2005 10:25:11 PM EDT
BTW, the interest rate yield curve is essentially flat after six months' maturity. Typically bond interest rates go up with longer time to maturity, so a 10-year bond pays a higher interest rate than a 6-month bond. For a variety of reasons long term rates are low right now, so the curve is flat after six months. To me it doesn't make much sense to go longer than that; you're accepting more risk for no extra return.

182 day tbills are paying about 4.2% right now. By comparison, some money market accounts are paying about 2% and six month CDs from retail bans are paying around 3.75%. EE savings bonds are paying about 3.5%.
Link Posted: 12/29/2005 10:36:55 PM EDT

Originally Posted By K2QB3:
....But if you don't have a $1000 bag of US junk silver stashed someplace yet that's what I'd suggest you do first.



Where can one acquire a bag of junk US silver?
Link Posted: 12/29/2005 10:50:59 PM EDT

Originally Posted By YANKEEFAN:

Originally Posted By K2QB3:
....But if you don't have a $1000 bag of US junk silver stashed someplace yet that's what I'd suggest you do first.



Where can one acquire a bag of junk US silver?



Here is one reputable and very competitive place if you have the cash to buy in bulk(like a bag)...

http://www.tulving.com/goldbull.html

small amounts are harder to get good prices on.
Link Posted: 12/29/2005 11:01:33 PM EDT

Originally Posted By K2QB3:
Here is one reputable and very competitive place if you have the cash to buy in bulk(like a bag)...

www.tulving.com/goldbull.html

small amounts are harder to get good prices on.



OK I just checked out that site and WOW. Is there a better and more budget conscious way to aqcuire silver than spednign 5k-9k a pop. I don't really have that kind of cash liquified.
Link Posted: 12/29/2005 11:08:06 PM EDT
[Last Edit: 12/29/2005 11:12:00 PM EDT by K2QB3]
Ebay or local dealers.

Be careful of shipping and such on ebay.

Here's an online dealer that sells smaller quantities, but their prices aren't quite as good as tulving, probably still beats the prices you'll find on ebay or a brick and mortar coin shop though.

http://www.goldmastersusa.com/silver_coins.asp
Link Posted: 12/30/2005 5:51:06 AM EDT
[Last Edit: 12/30/2005 5:54:26 AM EDT by Headlice]

Originally Posted By BIKECOP29:

Originally Posted By Headlice:

Originally Posted By BIKECOP29:
Go with REITs (Real Estate Investment Trust). By law, 90% of taxable profit gets paided out as dividends back to the shareholders. If your goals are long term, look into REITs. Tolerable risks with some good income potential.

Savings Bonds used to be the thing back in our grandfather's days. Like other members said, it barely keeps up with inflation. Plenty of info about REITs on google. I used to invest in a few when I was with www.shareholder.com.



Lost my arse on 2 REITs. I still have them and even though they are my largest dividend stocks, they are my biggest losers. I have lost more money in REITs than I have gained in dividends in them......



Damn. Sorry to hear that. Which ones were they? Were they specialized REITs like mortgage REITs?



Anworth Mortgage (ANH) and Annaly (NLY). At the time, they were both debt free. I just checked the quotes and noticed their dividends are CONSIDERABLY DOWN!!!! Im selling both of them right now.....
Link Posted: 12/30/2005 11:35:31 AM EDT

Originally Posted By QUIB: The kids received savings bonds as gifts from the grandparents this Christmas which made me start thinking………should I invest in them as well? Is the interest really compounded monthly like the .gov website states?
Heck no! They don't pay enough so it's a waste of your time. And the last thing you want to give Congress is MORE money temporarily.
Link Posted: 12/30/2005 12:05:45 PM EDT
[Last Edit: 12/30/2005 12:06:21 PM EDT by Headlice]

Originally Posted By KlubMarcus:

Originally Posted By QUIB: The kids received savings bonds as gifts from the grandparents this Christmas which made me start thinking………should I invest in them as well? Is the interest really compounded monthly like the .gov website states?
Heck no! They don't pay enough so it's a waste of your time. And the last thing you want to give Congress is MORE money temporarily.



To be honest, the national debt is a reflection of the American people's debt, not just the symbolic government. In other words, take the national debt and divide it by the number of people in the US- that is how much each person is in debt, or their responsibility for their share.

1/2 year ago it was $25,000 per person. Technically, to help the national debt, people should buy $25,000 worth of treasury securities. But in actuality, if the government does not make the return on the investments attractive, not many people are going to go along with it.
Link Posted: 12/30/2005 12:18:13 PM EDT
tag
Link Posted: 12/30/2005 12:36:02 PM EDT
I have started putting some of my "extra" money in to I Bonds.

If I have some left over money after paying bills, I put some of it away. Now bear in mind I have a pretty good work retirement account and a few other mutual funds. I use it to diversify my saving more than anything else.

from the TreasuryDirect website:

Current Rate: 6.73% through April 2006

Minimum purchase: $50 for a $50 I Bond when purchasing paper bond certificates

$25 for a $25 I bond when purchased electronically via TreasuryDirect
Maximum purchase: $30,000 in TreasuryDirect and $30,000 in paper bonds
Denominations: Paper bonds: $50, $75, $100, $200, $500, $1,000, $5,000, $10,000

Electronic bonds via TreasuryDirect: purchase to the penny for $25 or more
Issue Method: Paper bond certificates or electronic transfer to TreasuryDirect accounts


Link Posted: 12/30/2005 12:57:49 PM EDT

Originally Posted By Headlice: To be honest, the national debt is a reflection of the American people's debt, not just the symbolic government. In other words, take the national debt and divide it by the number of people in the US- that is how much each person is in debt, or their responsibility for their share.
That's why I'm always gunning for tax cuts so that the taxpayers will pay less and less out of pocket and the 'gubment has less and less to spend.

1/2 year ago it was $25,000 per person. Technically, to help the national debt, people should buy $25,000 worth of treasury securities. But in actuality, if the government does not make the return on the investments attractive, not many people are going to go along with it.
You're better off investing the money somewhere else, or spending it before you lose buying power.
Link Posted: 12/30/2005 1:03:25 PM EDT

Originally Posted By PVFD304: I have started putting some of my "extra" money in to I Bonds.

The bonds you buy pay for a Katrina Refugee's Welfare Card. It's a total scam.
Productive people with excess wealth are paying for the dregs of society on a "promise" from 'gubment to pay them back. Now the refugee becomes dependent on 'gubment, on your dime, and has enough money to survive to vote at the next election for Democraps. In the meantime, deficits and budgets keep getting bigger because they can always sell more bonds to suckers.
Link Posted: 12/30/2005 1:26:06 PM EDT
[Last Edit: 12/30/2005 4:37:29 PM EDT by rc2]
I Bonds are an excellent conservative investment. They always keep pace with inflation hence the name "I". And your interest is tax deferred for up to 30 years. So current "I" Bonds are yielding 6.73% tax deferred. This is in no brainer territory.

Just look at the total returns for the market in 2005. Dow was down a fraction, S&P up like 3%. Makes those 6.73% "I" Bonds sound pretty good.
Link Posted: 12/30/2005 2:15:17 PM EDT
Tag.
Link Posted: 12/30/2005 4:50:30 PM EDT

Originally Posted By rc2:
I Bonds are an excellent conservative investment. They always keep pace with inflation hence the name "I". And your interest is tax deferred for up to 30 years. So current "I" Bonds are yielding 6.73% tax deferred. This is in no brainer territory.

Just look at the total returns for the market in 2005. Dow was down a fraction, S&P up like 3%. Makes those 6.73% "I" Bonds sound pretty good.



Yep thats what I'm thinking too.


KlubMarcus, maybe the tinfoil hat is on a little too tight.



Top Top