Tipswatch.com
I participated Monday in a Barron’s Live 30-minute video podcast, hosted by Marketwatch columnist Beth Pinsker. The topic was strategies for buying Series I Savings Bonds in 2023. In January? In April? In May? Or just go with TIPS?
You can watch the video here (requires registration on the Barron’s site).
Or listen to the audio podcast on these links:
About this podcast
I Bonds, a once-obscure Treasury investment, soared in popularity last year because of its enticing inflation-adjusted rate that changes every six months, but individuals are limited by a $10,000 cap on purchases per year. Now that we’re in a new year, there are three key strategies to make the most of your investment. Join Beth Pinsker, investing columnist for MarketWatch and long-time journalist David Enna.
• I Bonds: A not-so-simple buying guide for 2023
• Confused by I Bonds? Read my Q&A on I Bonds
• Let’s ‘try’ to clarify how an I Bond’s interest is calculated
• Inflation and I Bonds: Track the variable rate changes
• I Bond Manifesto: How this investment can work as an emergency fund
Treasury Inflation-Protected Securities 
$10,000 purchase of USA total stock market in November 2000 versus $10,000 purchase of I Savings bond in November 2000.
Approximate values at December 31, 2022:
$36,000 VTSAX (before-tax)
$36,000 I Savings bond
sources: Vanguard and Treasury Direct savings bond calculator
https://investor.vanguard.com/investment-products/mutual-funds/profile/vtsax#overview
Inflation looks me, with 0.1 to 0.3 percent per month currently, to be perhaps dropping below 3.6 percent annual for sure… maybe a lot lower… I guess we wait and see…
Read “History Lessons: How ‘Transitory’ Is Inflation?” from Research Affiliates. You can google it.
$60,000 of I savings bonds you bought in year 2000? How did you get such a deal when the annual limit was $30,000. Spouse in the house? And loved your credit to bob brinker for the idea in the first place.
I noted that I DIDN’T buy $60,000. Should have, but who knew? Yes, the $60,000 limit was for a couple.
My mistake about $60,000 for yourself as i should have included the guess for your spouse. Congratulations on your *current* double digit returns. Twenty+ years of federal tax deferred interest/six month compounding/guarantee of repayment/interest exemption from state and local taxes when redeemed/liquid emergency fund/ purchase power protection. What a fine job you have done.
CPI-U one month percent change for Oct 2022 0.4 and Nov 0.1 was reported by the BLS on Dec 13, 2022. https://www.bls.gov/news.release/pdf/cpi.pdf Your blog post “The first two months, October and November, are already in, and inflation ran at 0.30% over that period, averaging just 0.15% a month.”
Can you please clarify.
Both I Bonds and TIPS track non-seasonally adjusted inflation, not the seasonal numbers that you were seeing. Non-seasonal in Nov was -0.1%. I track non-seasonal inflation on this page: https://tipswatch.com/tracking-inflation-and-i-bonds/
Excellent work. thank you.
Great presentation! In your remarks you mentioned a tax strategy of rolling over I bonds. I couldn’t hear your entire statement. Please provide an explanation.
It wasn’t a tax strategy, although I did mention that investors holding I Bonds to maturity should prepare for the taxes owed at maturity, by including the interest in their annual income for that year, and paying estimated taxes if necessary. The roll-over strategy I mentioned was redeeming 0.0% fixed rate I Bonds to buy I Bonds with a higher fixed rate, if you can’t raise the money elsewhere. Taxes will be owed on the redemption, however.
Hi David,
Great talk. For long time followers of this blog, most of it were things that you already mentioned, either in your posts or your comments. However, it was good to listen to it for the small but important comments that happen during a conversation, but don’t always make it in the text based posts. On the other hand, for newer listeners it likely gave a year worth of blog posts condensed in a 30 min chat. Pretty great in my opinion.
By the way, I had a quick question. In your 2023 I-bond buying guide, there’s a chart about correlation with 10year TIPs yields and I-bond rates. My question is, which source do you use for data about yield spread for 10 year TIPS ? e.g. the ones mentioned in https://tipswatch.files.wordpress.com/2023/01/yieldspread.jpg
To me, it looks like their formula has been more consistent with
I-bond fixed rate = (10 year TIPS yield) – (10 year TIPS yield spread)
The yield spread just subtracts the fixed rate from the 10-year real yield (after the rate is reset). I use Treasury estimates for the 10-year real yield.
I watched it to see what you look like… ha ha.
You were knowledgeable, logical, and articulate, as always.
If, as you suggested, the next I-Bond variable rate may be as low as 2 or 3 percent, then the fixed rate will have to be north of 0.7% to make it worthwhile vs. the current bond and rates, at least for those who want to redeem them in five years. Of course, it all depends on what the next variable rate is.