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I'm not too personally concerned about timing my I-Bond purchases or chasing rates because I'm treating it like an extended or extra credit part of my emergency fund. I bought 3k in 2021 and 10k this year, and I don't think I'll be buying any in 2023 because that would overweight my emergency fund when considering cash on hand, HYSA, and any very short-term instruments. It's not like my Roth IRA where I'll be contributing or backdooring every year as long as I'm still working.
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Jan 1, 2023 02:57
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So there’s a chance the 9.82 will decrease? I was one of the ones on that rate. It makes me not want to cash it until it matures bc it clearly beats the historical market average by a large margin.
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Jan 1, 2023 03:03
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cheese eats mouse posted:So there’s a chance the 9.82 will decrease? I was one of the ones on that rate. It makes me not want to cash it until it matures bc it clearly beats the historical market average by a large margin. Not only is it guaranteed to decrease, you don’t get to keep that rate until maturity: overall, it is a hybrid floating rate bond, as spelled out in detail at Treasury Direct. https://www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/
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Jan 1, 2023 03:15
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cheese eats mouse posted:So there’s a chance the 9.82 will decrease? I was one of the ones on that rate. It makes me not want to cash it until it matures bc it clearly beats the historical market average by a large margin. Yes that’s how they work. You only get the rate for 6 months at a time. Efb
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Jan 1, 2023 03:16
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It's why I Bonds aren't so great for long term IMO. The rate will be similar to a HYSA in a year or two.
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Jan 1, 2023 03:18
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Well was nice while it lasted but also glad grocery prices will finally (hopefully) stop rising stupidly.
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Jan 1, 2023 03:21
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cheese eats mouse posted:Well was nice while it lasted but also glad grocery prices will finally (hopefully) stop rising stupidly. Drivers could see gas prices surge to nearly $7 a gallon in some US states as refinery issues bite supply and Chinese demand bounces back
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Jan 1, 2023 03:27
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pmchem posted:Not only is it guaranteed to decrease, you don’t get to keep that rate until maturity: overall, it is a hybrid floating rate bond, as spelled out in detail at Treasury Direct. I had to go look this up recently and found this helpful in reminding myself what was up: https://treasurydirect.gov/files/savings-bonds/i-bond-rate-chart.pdf What are people's current thoughts on CDs? Looking at 3 month ones to park my April 18th est. tax payment (for 2023) in.
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Jan 1, 2023 04:47
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movax posted:What are people's current thoughts on CDs? Looking at 3 month ones to park my April 18th est. tax payment (for 2023) in. The best 3mo CDs are still quite a bit below the equivalent T-bill
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Jan 1, 2023 05:02
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drk posted:The best 3mo CDs are still quite a bit below the equivalent T-bill Any thread favorites on ETFs / market exposure to these vs. direct through TreasuryDirect? Also, I have some brainworms when it comes to emergency fund storage. Mine is parked at Ally right now and I choose not to think about inflation eating it but occasionally I think "well... I could move it into something that does better...", before not doing anything and letting it sit. Does everyone here just let $X sit, or play a small shell game in chasing a higher interest rate? Somewhat related to my earlier question... movax posted:Is there a specific windfall / large sum post / series of posts in this thread? Reading up on a few different articles (Bogleheads, etc.) but looking to answer a few key questions in the short-term at least (best parking-lot option, estimating tax, etc.). I may have the option in Jan/Feb to open a few new bank accounts, curious if Discover/PNC/other HYSAs are the 'ideal' options? Probably something that doesn't nickel and dime on EFTs/ wires. e: quote:A combination of 5 or more PIN and/or signature point-of-sale transactions (excluding cash advances) must have posted to your linked PNC Checking account during the previous calendar month using your PNC Visa® Debit Card or your linked PNC Visa Credit Card. "Direct" deposit... so they want ACH style transfers setup (like payroll), right? I wouldn't think transferring from my own Chase account would count. I guess I can bug my HR / Payroll to meet the 2nd condition... movax fucked around with this message at 05:31 on Jan 1, 2023 |
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Jan 1, 2023 05:26
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movax posted:Any thread favorites on ETFs / market exposure to these vs. direct through TreasuryDirect? Treasury bills can be bought through brokerage accounts as well, you dont need to use TreasuryDirect. $SGOV is a nice 0-3 month duration treasury ETF that is almost entirely comprised of treasury bills if you prefer a fund.
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Jan 1, 2023 06:27
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Residency Evil posted:What are people’s opinions on Ibonds in 2023? Are they worth picking up again now that their interest rate is low(er)? i admit i've never fallen in love with ibonds the way most posters in this thread have this year, but i really can't understand going all in on them again this year when tips finally have a significant positive yield sure, ibonds have better flexibility, but if you have any sense of when you need the money tips right now seems superior
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Jan 1, 2023 10:20
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movax posted:Any thread favorites on ETFs / market exposure to these vs. direct through TreasuryDirect? I’ve only done it through Fidelity, but the process of buying new issue treasuries should be pretty easy at any of the major brokerages. I’ve been converting some of my cash savings to <1 year bonds and automatically rolling them over as they mature. It might be too much effort for chasing a little extra yield, but what else is this thread for?
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Jan 1, 2023 13:48
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If I'm calculating 15% of income savings for retirement, would I include 401k match in that calculation? Or should the 15% be exclusive of 401k match?
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Jan 1, 2023 16:05
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That's personal preference. The 15% rule is agnostic of what kind of match your employer gives, so I personally do not include that.
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Jan 1, 2023 16:12
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Am I misunderstanding something about TIPs? The best I'm seeing is a 1 year yielding 3.5%, which is less than a 1 year treasury bond. And longer dated TIPs are under 2%. Is that just because its the secondary market and I should wait for a new issue auction? e: a TIPs ETF like STIP is currently yielding 4.47% which is I guess slightly higher than a regular bond fund like BND at 4.29% Baxate fucked around with this message at 17:32 on Jan 1, 2023 |
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Jan 1, 2023 17:26
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Baxate posted:Am I misunderstanding something about TIPs? The best I'm seeing is a 1 year yielding 3.5%, which is less than a 1 year treasury bond. And longer dated TIPs are under 2%. TIPS show real yields, not nominal. The nominal yield is the real yield + inflation adjustments, the latter of which is unknowable ahead of time edit: Not sure where you saw 4.47% for STIP, the ishares page shows 6.97%, which is actually the nominal yield (including inflation adjustments) drk fucked around with this message at 18:03 on Jan 1, 2023 |
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Jan 1, 2023 17:54
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This is not exactly a long-term style post, but I think rates are going to peak in 2023 and TIPS real yields will also peak. Throwing money at a 30-year bond that pays out ~2.5% real yield seems very cool. My parents are retired and sitting on a big pile of mostly cash. This kind of thing seems perfect for them.
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Jan 1, 2023 18:16
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DNK posted:Throwing money at a 30-year bond that pays out ~2.5% real yield seems very cool. Keep in mind that TIPS, as marketable securities, are subject to interest rate risk. As rates rose If your parents are retired, I'm guessing they are old enough that they are unlikely to hold a 30 year TIPS to maturity, so you cant ignore the market pricing factors.
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Jan 1, 2023 18:26
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drk posted:TIPS show real yields, not nominal. The nominal yield is the real yield + inflation adjustments, the latter of which is unknowable ahead of time I was looking at a quote for STIP on Fidelity and the 30 day SEC yield they were showing was as of Nov 30, so that explains that I guess. e: having a hard time comparing yields on TIP/STIP/VTIP to bond funds because for whatever reason TIPs will pay out monthly for most of the year but then not pay a distribution for October and November. Probably has something to do with when the treasury does auctions. So trailing 12 month yield is probably better than SEC 30 day, and yeah the cumulative distributions for 2022 in TIPs funds are way higher than bond funds. Baxate fucked around with this message at 19:00 on Jan 1, 2023 |
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Jan 1, 2023 18:43
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DNK posted:This is not exactly a long-term style post, but I think rates are going to peak in 2023 and TIPS real yields will also peak. Throwing money at a 30-year bond that pays out ~2.5% real yield seems very cool. Peak over what time period? When and where will the bottom be? Can I subscribe to your newsletter? 2023 IRA and I Bond maxing done. Feels good (though not super good since I meant I had been overly cash-heavy heading into today).
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Jan 1, 2023 19:42
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CubicalSucrose posted:Peak over what time period? When and where will the bottom be? Can I subscribe to your newsletter? Yeah I’m in a similar spot. I think I’ll just wait to buy the ibonds until later this spring to see if the fixed rate is higher?
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Jan 1, 2023 20:11
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Baxate posted:So trailing 12 month yield is probably better than SEC 30 day, and yeah the cumulative distributions for 2022 in TIPs funds are way higher than bond funds. Using a trailing 12 month look back on TIPS is going to make them look a little better than they currently are, because inflation was very high in early 2022 and has come down since. I certainly dont know what will happen to inflation this year, but it seems unlikely to be as high as last year. A chart, if you feel like speculating on where inflation adjustments are headed in 2023: 
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Jan 1, 2023 20:15
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The Leck posted:https://thefinancebuff.com/treasury-bills-cd-money-market.html Awesome, thanks! Looks like a great overview and the vehicle I’ll use to store tax payments / property tax / etc.
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Jan 2, 2023 01:50
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It looks like Schwab also does easy rollovers for T-bills. Would it be done to move my emergency fund from a HYSA to T-Bills? Presumably T-bills are super liquid?
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Jan 2, 2023 02:50
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Residency Evil posted:It looks like Schwab also does easy rollovers for T-bills. Would it be done to move my emergency fund from a HYSA to T-Bills? Presumably T-bills are super liquid? As I understand it (which may not be the best, I'm kind of self taught by reading this thread), T-bills work like other bonds, which means they have a maturation date at which point they pay out, which is kind of the opposite of liquid. You can (IIRC) sell them on the secondary market, but this usually means taking a loss, especially if interest rates have gone up since you bought them. People talking about replacing their emergency fund were mostly referring to I Bonds (sometimes I-Bonds, or I series bonds), which confusingly work very differently than normal bonds. You buy them and they pay interest* continually, but you can't redeem them for a year, and after one year redeeming them costs the last 3 months of interest, and then after 5 years redeeming them no longer costs interest. After 30 years they pay out if you hold them that long. So with I Bonds once you've held them for a year they can substitute for an emergency fund, though again you'd take a loss, and after 5 years they're effectively a hybrid of emergency fund and bond since you can cash out whenever. Though I bonds have to be handled through the treasury directly so cashing them out might take a day or two and so they aren't really "I need the money today" emergency funds. *A variable interest rate equal to the official inflation rate + sometimes a small additional rate depending on when you buy the bond, currently the fixed rate is .4%. Bremen fucked around with this message at 04:08 on Jan 2, 2023 |
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Jan 2, 2023 04:00
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T-bills are very liquid and I'm not sure why you'd assume you would "usually" take a loss selling them on the secondary market. Since they are zero coupon and sold at a discount, their secondary market value will approach par as they get closer to maturity (not necessarily in a perfectly straight line, but the interest risk is fairly minimal due to the short duration).
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Jan 2, 2023 04:20
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Residency Evil posted:It looks like Schwab also does easy rollovers for T-bills. Would it be done to move my emergency fund from a HYSA to T-Bills? Presumably T-bills are super liquid? T-bills are extremely liquid. That said it seems a hell of a lot easier to just buy ETFs like SGOV or BIL (which are also extremely liquid) rather than roll your own. I'm happy to pay them their 5-14 basis points to avoid having to submit auction bids and manually roll bills as they mature.
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Jan 2, 2023 04:29
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Bremen posted:As I understand it (which may not be the best, I'm kind of self taught by reading this thread), T-bills work like other bonds, which means they have a maturation date at which point they pay out, which is kind of the opposite of liquid. You can (IIRC) sell them on the secondary market, but this usually means taking a loss, especially if interest rates have gone up since you bought them. Yup, I have I-Bonds as well, but they're limited to 10k per person per year, and: drk posted:T-bills are very liquid Agronox posted:T-bills are extremely liquid. Yeah, that's the attraction of Schwab (and Fidelity, I think) being able to auto-roll T-Bills at maturity. Buy once and then forget about it.
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Jan 2, 2023 05:49
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Residency Evil posted:Yup, I have I-Bonds as well, but they're limited to 10k per person per year... If I purchased the max amount ($10k) say five months ago, as it is now 2023 I am able to buy another $10k today? Or is it based on when you purchased and I have to wait until it's been more than one year since I bought the $10k purchase? The current rate is still a lot better than my HYSA. Edit: Mu Zeta posted:It's per calendar year so you can buy now. I would actually wait until the last week of the month because you'll get credit for the whole month as long as you buy in January. Sounds like a plan to me. Thank you. Sand Monster fucked around with this message at 16:11 on Jan 2, 2023 |
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Jan 2, 2023 15:48
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It's per calendar year so you can buy now. I would actually wait until the last week of the month because you'll get credit for the whole month as long as you buy in January.
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Jan 2, 2023 16:06
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Mu Zeta posted:It's per calendar year so you can buy now. I would actually wait until the last week of the month because you'll get credit for the whole month as long as you buy in January. Isn’t it better to wait until the fixed/variable rates for the next period are known? That gives you that several week period to decide.
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Jan 2, 2023 16:43
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Residency Evil posted:Isn’t it better to wait until the fixed/variable rates for the next period are known? That gives you that several week period to decide. If you intend to hold long term, probably. If you intend to sell after the 1 year lock up period, the sooner you buy the sooner you can get the money back out.
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Jan 2, 2023 17:03
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Residency Evil posted:Isn’t it better to wait until the fixed/variable rates for the next period are known? That gives you that several week period to decide. As I understand it the variable rate will be known two weeks ahead, but the fixed rate is announced the day the rates changes. That said, the blog someone linked was pretty accurate at forecasting the fixed rate based on the rate of TIPS (determined by auction). So by two weeks before the rate switchover it'll probably be somewhat possible to predict if the fixed rate will be going up or down. Probably.
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Jan 2, 2023 17:15
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I have $9000 in cash in my truck replacement fund and I'm putting $1000/mo into it for the foreseeable future. I don't see myself buying a vehicle in 2023 unless something forces my hand. Should I be looking at I bonds or TIPS or something else? Currently my only accounts are with Vanguard (rollover IRA for me and Roths for my wife and me). I thought about I bonds last fall but it seemed like more trouble than it was worth. e: I should mention that I do something similar with my Roth funds, i.e. I put $1000/mo aside and hold it in cash until January at which time I make my contribution for the year, so I guess it would also be nice if I could earn a bit of interest on those as I go, too. Easychair Bootson fucked around with this message at 00:06 on Jan 3, 2023 |
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Jan 2, 2023 23:52
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I bonds are locked for one year and you pay a penalty for withdrawing before year 5. TIPS probably aren't great for a 1 year (or potentially less) savings either. Go with T-bills, $SGOV, or a good money market. If you've already got a savings account paying 3.5%+ that could also be a good option too.
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Jan 3, 2023 00:24
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I’d probably park it in HYSA and forget it. Not enough time to make chasing a few basis points worth it.
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Jan 3, 2023 13:02
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Good points. It looks like Citi does a 3.3% rate and I've got my main credit card with them and have been happy, so I'm going to see about opening an account there. Thanks!
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Jan 3, 2023 15:50
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2023 I Bond buying guide is up @ TIPS watch: https://tipswatch.com/2023/01/03/i-bonds-a-not-so-simple-buying-guide-for-2023/ Short summary: long term investors should consider waiting until mid-April to buy I bonds. TIPS continue to look good but are more complicated and have risks I Bonds dont (currently mitigated to some degree by having a higher real yield than I Bonds).
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Jan 3, 2023 18:58
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drk posted:2023 I Bond buying guide is up @ TIPS watch: https://tipswatch.com/2023/01/03/i-bonds-a-not-so-simple-buying-guide-for-2023/ Thanks -- setting a calendar reminder for 4/12 to check in and make my I-Bond decision. I have the following key big $ dates in the next 6 months, so far: * April 12 -- I-Bond decision date * April 15 -- Tax Day (2022 Taxes), Quarterly Tax Due (2023) * April 30 -- Property Taxes Looking on Fidelity at their CD options for 3 month, lets take the WF 3 mo one as an example -- the maturity date of 4/13 means that end-of-business 4/13 is the fastest I could liquify it, and then would likely have to give an additional few business days for Fidelity to clear it + do an EFT back to my checking to cut a check for property tax, correct? Same with I-Bonds, regardless of the decision on 4/12, I have until 4/30 to make the purchase (if I want the existing rate) or wait until May to go for it. Ergo, that maturity date would be a no-go for parking tax payments?
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Jan 3, 2023 19:55
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