Buy I Bonds Now or Wait?

[LivingAlmostLarge]

wish I had a longer ladder of ibonds

[kork13]

Just a reminder for everyone -- Welcome to May, and the Treasury has updated their I-Bond rates.

New I-Bonds from May-Nov'23 will be issued at a 4.3% rate, including a .9% fixed rate.

I've already got a new purchase of $5k set up for end of May (using up my 2023 limit -- I purchased $5k in January).

[LivingAlmostLarge]

missed the higher fixed rate i just bought earlier in the year. It's just easier to do everything in january.

[QuarterMillionMan]

I bought another $10k in January 2023. I have a total of $20k. But I'm not buying anymore. In fact, I'll be cashing out as soon as I can avoid the penalty which I think is 18 months. Why you might ask? Because I don't trust big government's ability to pay out at the rate big government is spending into oblivion. I rather buy more gold/silver.

[james.hendrickson]

To your point QMM - I picked up a few more mercury dimes today. I think the Feds will be able to pay the bills.

The question at this is...is your portfolio well positioned to handle changes in economic growth and/or changes in interest rates.

[disneysteve]

I bought another $10k in January 2023. I have a total of $20k. But I'm not buying anymore. In fact, I'll be cashing out as soon as I can avoid the penalty which I think is 18 months. Why you might ask? Because I don't trust big government's ability to pay out at the rate big government is spending into oblivion. I rather buy more gold/silver.

People have been anticipating the fall of the government since day one. It ain’t happening.

I bonds must be held for 1 year.

[QuarterMillionMan]

Good move James getting some Mercury dimes. And thanks ds for the information on I bonds, I see that I can sell after 1 year but will lose 3 months interest which I'm okay with. I would take out my first $10,000 and leave the interest along with the new $10,000. As for the government failing, I'm more concerned about the dollar losing its world reserve currency status but not the government falling or failing.

[james.hendrickson]

QMM - why not keep the bonds until you're past the redemption period?

I believe your thinking to limit political risk is correct. And my observation is that you're much more attuned to political and system risk than most, so kudos for thinking about it.

AND if you took a step back and looked at it, you have options to achieve the same goal without taking the penalty.

You can always offset the risk to your total portfolio by buying some other currencies, getting exposure to international stocks, or real estate, getting more crypto or buying precious metals.

To incur the penalty to relocate the funds only seems to make sense if you have an immediate dire need for the money.

Also, something else to consider - regarding the dollar losing its reserve currency - you don't know WHEN this will happen and HOW MUCH of the dollar's status as a reserve currency will be lost. Nobody does. So any portfolio decision you make should probably be related to a reasonable estimate of these two factors. For example, it might only make sense to cash out $1,000 worth of the bonds, or $5,000 worth of the bonds.

In any event, it might make sense to take a step back and consider your total portfolio. You have options that don't involve the penalty.

[james.hendrickson]

Just a reminder for everyone -- Welcome to May, and the Treasury has updated their I-Bond rates.

New I-Bonds from May-Nov'23 will be issued at a 4.3% rate, including a .9% fixed rate.

I've already got a new purchase of $5k set up for end of May (using up my 2023 limit -- I purchased $5k in January).

Nice update, thanks Kork. I'd missed that.

[QuarterMillionMan]

James good analysis and insight. I hope the dollar never loses its status as the world reserve currency. But I watch too many Youtube videos the likes of Ray Dalio, Peter Schiff, Robert Kiyosaki, Kitco News, Stansberry Research, Glenn Beck, BRICS emerging economies, etc. They scare the daylights out of me. I still hold the majority of my assets in dollars but as an insurance measure I'm buying precious metals and cryptos just in case, I choose not to bury my head in the sand. And I can always sell my gold and silver back if the dollar retains its status.

Edit to add: if it does happen it'll be too late to buy gold at 5x or 10x or more. I'd rather prepare now and not wait until it's too late.

[disneysteve]

I watch too many Youtube videos the likes of Ray Dalio, Peter Schiff, Robert Kiyosaki, Kitco News, Stansberry Research, Glenn Beck, BRICS emerging economies, etc. They scare the daylights out of me.

There's your problem.

Stop watching them. Problem solved.

[james.hendrickson]

There's your problem.

Stop watching them. Problem solved.

Ray Dalio is totally worth watching. He's been a highly successful investor. Nothing wrong with studying the greats.

Shiff and Kiyosaki can be depressing. I follow Kiyosaki. He seems angrier since his life left him.

[QuarterMillionMan]

There's your problem.

Stop watching them. Problem solved.

Ha-ha, acknowledged.

[disneysteve]

Ray Dalio is totally worth watching.

I watched a couple of minutes of the video you shared the other day. He lost me in the first 5 seconds when he said we're on the brink of war with China. It didn't take long after that to realize he is not mentally stable. There's some serious paranoia going on there at the very least. I didn't waste my time on the rest of it.

[james.hendrickson]

I watched a couple of minutes of the video you shared the other day. He lost me in the first 5 seconds when he said we're on the brink of war with China. It didn't take long after that to realize he is not mentally stable. There's some serious paranoia going on there at the very least. I didn't waste my time on the rest of it.

Disneysteve - well, I am often wrong, and most of the people on the forums here are far, far richer than me. So, I'm also open to being wrong about this.

AND, if you take the long run of human history, war, conflict and political change seem to be an ongoing part of the human experience. It's just most investors in the US don't have much experience thinking about these topics because: a) most professional investors lack military experience and b) the body of investing knowledge (our mathematic models and commonly understood investing concepts) just don't deal well with low probability high impact events.

A better, more sober response might be to ask yourself questions such as "if a war were to happen, how might I best position my portfolio to maximize my return from it?'. Or, "If the dollar were to lose its reserve status, how should my investing behavior change to take advantage of it?".

I haven't read much on this subject - there are really only a couple of good books this subject - but your investing behavior might not change all that much. From what I gather the stocks do better during wartime and diversification is still the best way to hedge your wealth even if black swan events like a war or massive loss of political/purchasing power do occur.

That said, many people on this forum have far more experience investing than I do, so I'd welcome a robust discussion on this topic.