Hi everyone,
Do you think it is a good idea to purchase any treasury bond right now?
I currently have 10k invested in Ibond, yielding 3.06%. If I have to take out the money in less than 5 years, 3 most recent months interest will be forfeited.
The EE bond currently has a very low yield, like 0.9%. But the treasury guarantees to double the EE bond if you invest for 20 years. That comes to about 3.5% annually.
Have you owned any of these bonds? Pros and cons?
Negative here. There are many firms with stocks that yield above 4+%.
Adding to that the US treasury has rules as you noted on redemption.
Waiting 20 years for 3.5%? Madness once you factor even conservative inflation levels of 2-3%
It depends on your asset allocation (for the PP, savings bonds can be treated as a type of cash). There are several advantages: free of state tax, federal tax deferred, rate can't drop below zero, principal can't decrease, rate is independent from the Fed funds rate. I think they're better than any other "risk-free" treasury bond right now. Whether or not there's a place in your portfolio for them is up to you.
@rcamp & Chris,
It is good to hear your input. I have been pretty bad investing in the stock market. The gains I have made have always been small, but the losses are easily 10 times of the gain. With so much uncertainty in the market now, I am scared of going into stocks.
When I look at my portfolio, most of them are sitting in cash or CD. I have been thinking about getting some corporate bonds with a bigger company. Is that safe than stocks (including dividend stocks) and yield a better return than what i am getting now?
I am still fumbling my way through investing, but I began buying i-bonds this year. However, I keep all my retirement savings in stock funds, since I have quite a long way to go, so my reasoning for i-bonds is as follows:
1. Diversification, since the amount I am putting into stocks is finally getting somewhere
2. Hedge against inflation, which is bound to pick up at some point
3. Better than CDs for a portion of my emergency fund
Mainly, I wanted someplace to put extra cash, which I do not foresee needing in the near future, that is not as scary as stocks but at a better rate of return than a savings account. It is also my self-insurance fund for wind insurance.
Hopefully, I am doing the right thing. With all this investment stuff, I do the research, but the more I learn, the more I feel I don't know, and half the time I just have to close my eyes and jump in.
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