Why do I generally recommend my friends not purchase I-Bonds? Is there a better alternative?
#IBonds #InflationProtectedSecurities
— Follow-up Videos:
Asset Protection for Ordinary People:
Market Timing: Is Now a Good Time to Invest?
Tax-Efficient Asset Allocation [5 Steps to Avoid Taxes]
retirement planning Playlist:
— Outline
00:00 Intro
00:21 I-Bonds & Nominal vs Real Return
01:26 I-Bonds & Negative Real Return
02:26 I-Bonds & Retirement Accounts
04:03 I-Bonds vs TIPS: Treasury Inflation Protected Securities
11:12 TIPS Funds & ETFs
—
Disclaimer: I am not a financial advisor. My videos are for educational purposes and are my opinions. You should seek advice from a professional advisor or perform your own research. There is no guarantee you will be successful following my opinions….(read more)
HOW TO: Hedge Against Inflation
REVEALED: Best Investment During Inflation
HOW TO INVEST IN GOLD: Gold IRA Investing
HOW TO INVEST IN SILVER: Silver IRA Investing
Thanks for watching! Here are some follow-up videos:
Asset Protection for Ordinary People: https://youtu.be/Kq1abJITb-g
Market Timing: Is Now a Good Time to Invest? https://youtu.be/TkUgVBoW1qA
Tax-Efficient Asset Allocation [5 Steps to Avoid Taxes] https://youtu.be/5t7IRZVKkNE
Why I’m not buying IBonds? I bought i bonds for myself…no problem. While creating an account for my wife the primary account numbers were misplaced and my local bank rejected the account. As a result we were required to get her signature certified. We went to three branches of the same bank and all the branch managers told me “they don’t do that”. A letter to the bank (TFS) CEO got my wife’s signature certified. Now it’s been weeks waiting for Treasury Direct to respond. I’ve missed out on the highest rate and in a few more weeks we’ll miss the chance to buy IBonds before the end of 2022.
I wonder why my financial advisor at my credit union did not tell me about any of this.
Great video. You style is refreshing and to the point. -With gratitude + utmost respect
FIPDX has been falling for the whole year, while I Bonds were paying 9.62% and now 6.48%.
How TIPS can be called “inflation protected” if they become cheaper and cheaper during such high inflation…
This has to be some of the dumbest advice ever given in a financial youtube video. It is so terrible that I for a moment thought he was trolling. I-bonds are among the best investments currently available to retail investors there is not a zero-risk investment that even comes close. TIPS???? Are you serious? Who in their right mind would prefer 2% over 9.62%? FIPDX is down -13% YTD and VAIPX and even worse -17% YTD and they yield way worse than I-bonds. This kid has no idea what he is doing, he probably lost all his money in Bitcoin and now considers himself a financial expert. Smart people maxed their I-bonds, parked money in T-bills ladders and their emergency money in HYSA. Once the FED starts lowering interest rates we will be buying stocks with both hands.
The video missed a key consideration around interest rate / duration risk that can significantly impact the value of TIPS. Increasing inflation is often followed by policy driven interest rate increases which can dramatically reduce the market values of longer-term TIPS / TIPS funds and offset the inflation protection. A great benefit of I Bonds is they do not really carry duration / interest rate risk. In an increasing rate environment, you can always cash them out and reinvest in higher rate nominal bond without incurring market losses. For example, the 15+ year PIMCO TIPS ETF (LTPZ) is already down 33% this year due to increasing rates, despite the highest inflation in 40 years
Terrible advice. I-bonds don't have to be long term investments. The 9.62 from last reset, and the 6.48 for the current reset equates to an annualized yield of 8% . If for example the next rate would drop to 2%, which it won't, you can hold the I-bond for 3 months, and that will be the penalty. An awesome interest rate guaranteed, buy as many as you can. I bought 7 for me and my wife.
For large emergency funds, ibonds are a decent place to sit
Even if you buy I bonds and cash prior to 5 years you forfeit 3 months. At 9.62 you'll still be getting 7.22 which isn't bad for a short term investment.
Diversity is the key.
I've owned I bonds since 2002. It's been a horrible investment yielding less than 3%
It’s my understanding that tips are based on the change in the inflation rate, not the inflation rate itself. Correct?
Don't you lose the state and local tax exemption benefit if TIPs are held in a traditional IRA/401K? Isn't the interest being reinvisted and then the 401k withdrawals subject to all taxes?
Man, what are your credentials?
Tips the value of the bond can go down so aren’t the overall value down 13% even though you get at 7% interest rate but your total value went down 13 percent for explain that
I spent an hour on the GOV website trying to enlist in I Bonds. It errored out so badly, I just gave up. Never mind. I think it's a good deal at the current rate being offered. If you can get it to take your money, that thing will double in value in 10 years if you do absolutely nothing. Put your money away in a safe place like this where you can't spend it easily. Remember, "it's your money until you give it away".
Absolute nonsense 8%+ for 1 year with virtually no risk is a great investment in this high inflation environment
I am 76 years old and was thinking to buy a savings bond for my daughter. I am old age but I think is better to buy a bond than my account in a bank who paying nothing for my savings.
Agreed but no harm in having some I Bonds. DCA in a mix of assets. Index funds and things of that nature in a 401K, pick your long term favorite equity in a Roth/IRA. Looking into TIPS.
hi Nick, thanks for the thorough explanations here. I am questioning the tips funds however, since unlike holding to maturity with a direct buy of say a 5 yr tip, where u at least get your principal back, those funds are risky, no? they are seriously down for the yr for ex.
However Tips you gotta pay fed taxes yearly I bonds you don't until you redeem them.
For right now I bonds are great. They are a lot better that the negative 22% my IRA acount is doing.
I'm still buying stocks but have also picked up I-bonds to take advantage of the current rates. I don't plan to keep long and will likely sell when the one year is up. Sure, I'll lose 3 months gains but what I do make is still better than the current market and I can use that money for my son's college tuition. What am I missing?
why not sell puts on spy to try to get the stock market cheaper
Sorry but I cannot see the advantage in buy Tips over 5 yr CD's or MYGAs which are paying close to 5%. Please let me know what is the allure of TIPS. If we enter a deflation era , yes I see some attraction, but the USA economy never seems to do that. I live in Japan where we have had something close to deflation, but they call it stagflation. At this time Japan is beginning to have some inflation for the first time in decades. Please advise .
Great analysis! Where do you learn this stuff???
Good video. I have maxed out on 401k, Roth, and HSA and needed a place to park some cash that I won't need for 5 years.
IBonds are a great place to put them.
Thanks Nick. Great explanation of the differences between TIPS and I-Bonds.
I wouldn't follow this guy's advice
Totally agree on your points for younger people. For us in retirement ibonds are a great way to hold some cash, which we will use over the next 1-2 years. We don’t want to sell stocks in a down market., which otherwise we need to do. We already have TIPS as part of our bonds.
I am 67 yr old. You I believe. You lost me 4 pages ago.
9.62% iBond is a good 1 year rate for 10k.
Thanks for making this video. Good info that I'm not really hearing elsewhere.