General Thoughts on I-Bonds

[abds]

Hey Everyone,
I was curious what people's thoughts were in I-bonds in the current inflation situation. The Treasury Direct website states that the initial interest rate would be 7.12% if you buy before April 2022. Is that # likely to change?

I have a little bit of extra money to invest but am reticent to put it into the stock market right now with all the volatility projected for the next year. But at the same token if I put a decent amount into bonds my asset allocation would be somewhat skewed more heavily to bonds (my age is 31, retiring in 60s hopefully).

Thanks for any input!

i-bonds are 10k per year per person. So you really can't "skew heavily toward bonds" with i-bonds alone unless you're not saving very much money.

In 30 years you will be wishing you could buy into the S&P 500 at 4500 (or whatever index fund you wish to buy at whatever it's at today).

[blippi]

the above may be true now, but not when the fixed rate goes higher, no?

[brokeradiologist]

Thank you both for your $0.02! Appreciate it.

[docnews]

They are the best low risk bonds. That being said you make 0% pretax real (post inflation) unless there is deflation and then you could make above 0% real because the I bond rate cannot go negative.

I bonds are pretty good at preserving wealth but not at growing it. You have to take on some risk to grow your savings. If you index the market (buy some of most of stocks) you eliminate the chances of losing it all (company going bankrupt) and have the best chance for long term growth.

[jz-]

but am reticent to put it into the stock market right now with all the volatility projected for the next year.

your brain is naturally wired SO WRONG to exploit the benefits of stock market appreciation. you must rewire your brain to dive into the "volatility" and think for the long term.
Ibonds are not bonds. They are inflation-protected cash. Do you need inflation-protected cash? Saving for a near/intermediate term goal? Need to establish an emergency fund? Then buy Ibonds now. The FED will raise the base rate several times this year. The flex rate may rise or fall depending on inflation rates.

[brokeradiologist]

Hey Everyone,
I was curious what people's thoughts were in I-bonds in the current inflation situation. The Treasury Direct website states that the initial interest rate would be 7.12% if you buy before April 2022. Is that # likely to change?

I have a little bit of extra money to invest but am reticent to put it into the stock market right now with all the volatility projected for the next year. But at the same token if I put a decent amount into bonds my asset allocation would be somewhat skewed more heavily to bonds (my age is 31, retiring in 60s hopefully).

Thanks for any input!