Are I bonds still a good deal? on clarkhoward.com

For years, Clark has loved I bonds and sung their praises at the top of his lungs…but where does he stand on them today?

Series I bonds are an unnecessarily complicated product. The "I" stands for inflation, and they're like the cousins of the original savings bonds. I bonds offer a fixed rate of interest for as long as you own them, plus a floating rate based on the rate of inflation. The rate of inflation changes every 6 months.

If you bought I bonds anytime in the late '90s through until about 2001, you're sitting very pretty on handsome returns of around 6%.

However, the deals weren't necessarily as good in 2002 or 2003 or anytime since. People who bought them during certain periods last year are earning zero percent as their guaranteed rate, plus the rate of inflation.

If you buy them today, your total earnings could be as low as 2.46%.

So Clark's advice is simple: Stop buying I bonds until further notice. They're no longer the deal they once were.

If you're sitting on I bonds purchased between 1998-2001, however, hold on to them for the full 30-year term.

What others are saying

I Bonds Stop Paying Interest
I noiticed that my I Bonds have stopped growing in value. Between Sep 2009 and May 2010, the value of my bonds remain the same. No interest is added or compounded. First I thought that my SavingsBond Wizard (Treasury tool) was out of date, so I checked the Treasury Website. Sure enough, I-bonds that I bought in Sep 2000 do not pay any interest or grow in value between 9/2009 and 5/2010. Wonder why I did not hear anything about that in the news?
By Jeff Swain @ 11/07/09 12:28:14 PMreport abuse
what about I bonds now?
Now that the Obama circus has spent to thier hearts delight and mortgaged our future, people are starting to talk about hiper-inflation again. I even heard the Oracle of Omaha mention that inflation is inevitable (as well as the dramatic devaluation of the dollar). So wouldn't I bonds be a good investment now? Here is an excerpt from Buffet's editorial: While expressing his strong support for past governmental actions to stem the U.S. financial crisis, renowned investor Warren Buffett recently sounded strong warnings about the mushrooming federal debt and its long-term potential damage on the purchasing power of the U.S. dollar. In an August 19 editorial in The New York Times, Buffett expressed his deep concerns that the side effects of enormous "dosages" of monetary medicine may be "as ominous as that posed by the financial crisis itself."

Slowing down the government's dollar printing presses will require "extraordinary political will," according to Buffett. Legislators, highly reluctant to raise taxes or cut spending when hoping to get re-elected, will be tempted to opt for higher rates of inflation. Unchecked growth in government indebtedness would cause the purchasing power of the U.S. dollar to melt. Concludes Buffett: "The dollar's destiny lies with Congress."
By Peter @ 08/26/09 02:36:38 PMreport abuse
Why sell or not ?
I understand there is some penalty for a 5 year period, so it seems I should sell what i bought in 2003.
1) Are there any disadvantages to selling since there is 0% rate?
2) If not, why keep if you bought in 1998-2001, I thought the only advantage for the full term is that you stop earning after 30 years.
3) Why not sell anything and buy when things are better.
By gtyellowjacket @ 07/19/09 10:27:01 PMreport abuse
I-Bonds
Just in case this one slipped by Clark.
I have a big chunk in I bonds and was enjoying great returns (as high as 8.4%). Then July 1 the total rate dropped to 0.0% because we now have deflation which negates not only the inflation factor but also the socalled fixed portion of the interest rate. This could slip up on most people who buy bonds then never look at them. Hopefully the rate will return once we get back to our normal inflationary ways. It's a shocker anyway....
Ken
By KenPost @ 07/06/09 02:22:17 PMreport abuse
I bonds
I bought 10/2001 and using the bond wizard calculator it says right now I'm earning 7.99%?! Is it wrong because I heard Clark Howard on his video minute that everyone is earning 0 no matter when they bought it???
By Vivi @ 05/22/09 03:12:07 PMreport abuse
i bonds
i am ever so excited about earning 0% with the new may 2009 rates. guess i misunderstood. thought the fixed rate would never change. the trickery gov chose a -2+% which allowed them to make my interest rate now 0%. but i will keep them an extra 3 months at 0% before cashing them in so that i won't lose the 8%(3 months) i made until then as i have not owned them quite 5 yrs. it was good while it lasted.
By leslie cockrell @ 05/09/09 08:49:58 PMreport abuse
I Bonds - gene and Mark
gene - you are correct, the BOND WIZARD is a great tool to track your bonds and help you to understand how they work. But you still need more research to fully understand all the details involved with I-Bonds. Most people just don't want to bother and never really get there.

Mark - I too am anxious to see what the Treasury will set the fixed rate at in May. They don't seem to be interested in selling I-Bonds anymore. Proof of this is seen in the lower limits of $5,000 paper and $5,000 on line that now exist. Only chance of selling these things with the upcoming composite rate of 0% will be to entice us with a high fixed rate. I hope that's what they do as I expect the U.S. printing of money will cause some pretty high inflation rates in the years to come. So, give me a fixed rate of 3% or higher and I'll be happy to buy all I can using every member of my family. I've done very well on those I purchased in 1999 - 2001. Wish I could have bought more with that fixed rate of 3.6% back then. Back then we were even allowed to purchase the I-Bonds with reward credit cards. Made 1 1/2% just for buying using AMEX.
By Paul @ 03/27/09 01:59:26 PMreport abuse
I bonds
Paul is one of the only people with his facts straight. By April 16 we'll know what the new semiannual inflation rate will be beginning May 1. For Sept thru Feb it's at -3.0%, so 1 more month won't come close to making this a positive number, which will wipe out the fixed rate for most existing bonds when their composite rates reset. If you buy before May and hold for only 12 months, your return will be about 3.2%(see my 3/22 note). Any guesses at what the Treasury will set the fixed rate at on May 1? It'll be kind of weird offering new bond with a grand 0% composite rate for 6 months.
By Mark @ 03/27/09 12:06:59 PMreport abuse
I-BONDS
go to treasury direct and download the BOND WIZARD
By gene @ 03/26/09 01:10:51 PMreport abuse
Bad news people
Many people assume an I-Bond can't pay less than the fixed rate. NOT TRUE! If we have deflation, it will wipe out part or all of the fixed rate. However the composite rate can't go below zero so at least we can't lose money.

We only have one more month left in the latest 6 month period which is used to calculate the composite rate and we are at negative 6% on an annual basis. Even if we have 1% inflation in this last month (March), we will still see negative 4% annualized. That means even those of us who have I-Bonds with a 3.6% fixed rate are going to see 6 months with a composite rate of 0%.

But then, most of us in the stock market would have loved to have seen the last 6 months where we made nothing and LOST nothing.

If anyone disagrees with what I've said here, feel free to go read the real story for yourself at the URL below.

http://ibond.gov/forms/savdc1-98.pdf
By Paul @ 03/25/09 02:52:01 PMreport abuse
10 years annuity
unfortunately lost in a 10 year annu
trusting my financial institute ted in I started in 2002 with 10000 and over the years put 6000 more but when I was 59 and half got out off it due to financial crisis but got only 14000/I
By audrey @ 03/25/09 12:13:57 PMreport abuse
The 2.46% figure
Some previous writers have questioned Clarks statement "If you buy them today, your total earnings could be as low as 2.46%."
Clark got the 2.46% figure from the current semi annual inflation rate.
It would be paid for 6 months then
re-adjust. Which is going to be next
to nothing. Add 2.46% (for the first 6 months) to 0% (the second 6 months) and you get a total of 2.46%. Hence, the statement by Clark.
By Alan @ 03/24/09 06:30:53 AMreport abuse
I-Bonds true annual rate
Clark is right on. The current rate for I-Bond is 5.64%. That is the annual rate (not semi-annual as some have claimed) which is good for only 6 months. The fixed rate is .70% and the variable rate is changing in May. We do not have high inflation now. In fact we now have deflation. The variable rate is going to be 0% or close to it. So, the I-bonds are only going to be paying the fixed rate portion. I-Bonds are going to have puny returns. Here's the link for the current rate. http://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm . When you are there and if you want to see the current fixed rate and inflation rate click on the following link in the left hand column. I Savings Bonds Rates & Terms I hope this clears it up.
By Alan @ 03/24/09 06:05:47 AMreport abuse
I-Bonds
I think Clark is over extending himself in the same manner as the President. I believe he is a bit off with his I-Bond calculations.
By Sharon @ 03/23/09 06:13:47 PMreport abuse
Treasury bonds I Series
They changed the amount you could buy in 2008 or 2009. It's now ONLY $5,000 per person per year.
"Electronic: $5,000 per Social Security number per calendar year. Paper: $5,000 per Social Security number per calendar year."
By S.Y. DOVE @ 03/23/09 05:11:52 PMreport abuse
Vanguard Bonds
I am retired and after losing 1/2 my 401K in stocks, I said "I give up" and have put what's left in Vanguard government back bonds. Sure they only earn 4 1/2%, but even with inflation at 4%, I am NOT LOSING capital, which is a welcome change for me.
By Tiffiny Tennyson @ 03/23/09 04:41:09 PMreport abuse
Please Clarify
Whiat is the rate - Clark's or the posters? We need to know who is right!
By Ronnie @ 03/23/09 03:22:41 PMreport abuse
I Bonds Relative Rate of Return
What does your I bond rate of return compare to you 401-k even over the last 10 years? I-bonds are still the best buy for long term investments
By Charles @ 03/23/09 03:07:41 PMreport abuse
For those who bought in April 2008
If you bought I Bonds in April 2008 when Clark was telling you to buy, you will still do pretty good by holding on to them. It is new purchases that are a poor deal. I personally bought some in April 2008 and will sell them on January 1, 2010 when I get my last interest payment under the "inflationary" rates.
By Sean @ 03/23/09 02:12:35 PMreport abuse
I bond rates will PLUMMET in May
Because the variable portion of the I-bond interest is tied to CPI-U, rates will PLUMMET in May as CPI-U has been undergoing DEFLATION for several months. This means your TOTAL return will be your fixed portion (as low as 0.0% or 0.7%). And because these bonds require you to hold them for at least one year (five years if you want to avoid the early withdrawal penalty), you will be stuck with those PUNY rates for at least 6 months after your 6 months of ~5%.
By Sean @ 03/23/09 02:02:14 PMreport abuse
Are I bonds still a good deal?
bought Ibonds the max 5000 for me and 5000 hubby last year because Clark said it was a great deal the intrest is still better than a cd
By D @ 03/23/09 01:59:34 PMreport abuse
i bonds
I bought them in 01, thanks thanks clark for the advice. they will help the kids when it's time for a downpayment on a house.
By abbey @ 03/23/09 01:12:52 PMreport abuse
I-Bonds
I recall purchasing I-Bonds in 2003 because Clark was saying how great they
were. Now he says they haven't been so great since 2001????
By April @ 03/23/09 01:08:05 PMreport abuse
I bombs
Wish Clark had told me what to do with the $1200 per month I'm now sinking into I bonds. Guess I'll keep on doing the same thing.
By James @ 03/23/09 12:44:36 PMreport abuse
Clark, please set us straight here...
Clark (not one of his staff) needs to take a good look at this one again. First off, get the numbers straight, considering semi-annual rates. Based on Clark's urging, my wife and I bought the maximum amount allowed ($5K each) April 30, 2008 and now Clark is trashing the idea?
By David @ 03/23/09 12:24:27 PMreport abuse
I-Bonds
I bought in 2001 with a 3% base plus rate of inflation. A Tremendous deal. Actually drawing over 7% now. Over 50% return since 2001. Agree now not a good deal. Also are limited to $5000 now. Then was 30,000. Double that including spouse.
By Dick @ 03/23/09 12:00:21 PMreport abuse
I bonds
If you plan to hold new purchases just a year, your return will beat most CDs. The semi-annual rate is currently 5.64%. If you purchase on the last business day of March or April you will receive interest for the full month. After 6 months the composite rate will almost certainly be 0%, because the semi-annual inflation rate will wipe out the fixed rate. Sell the bond the first day you can (12 months after issue date) and you'll lose the last 3 months interest (which will be nothing). For the 11+ months you held the bond you will have received 2.82% (=5.64%/2), which is about 3.08% annualized. With no state taxes owed, this is equivalent to 3.24% in a state with 5% income tax - not great, but okay.
By Mark @ 03/22/09 01:46:05 PMreport abuse
I Bonds Rate
I just now saw Clark caution us on TV about I Bonds BUT we just purchased $10,000 @ 5.63. Yeah, it's until May BUT with the market going up, inflation will have to grow. Please have Clark update his thoughts as to why he feels the I Bond is a "NoNo". The 2.46% he quoted is a SIX MONTH RATE so the annual rate is twice that plus 0.07% fixed. Please update us, we all rely on his intellitect to keep us on the almost straight path to success!
By JimE @ 03/16/09 03:59:51 PMreport abuse
Return on I Bonds
I respectfully disagree with Mr. Howard on this. I Bonds seem to be a perfect place for my "money under the mattress."

They keep up with inflation (plus the fixed amount), income taxes are deferred until redemption (unlike my CD's), and there are no fees (unlike my mutual funds).

I'm not trying to be greedy with these investments. I'm looking for low risk with a return that meets or exceeds inflation.

I Bonds meet that objective.
By Dale @ 03/16/09 01:20:15 PMreport abuse
Bonds Redemption
When can u cash in Saving Bonds and how long must you hold on to them?
By Clay @ 03/16/09 07:52:24 AMreport abuse
Return on I Bonds
The way I read this on treasurydirect.gov. that even for a zero fixed rate the inflation adjustment gives you a return for last June 08. Here is the calc from treasury direct:Composite rate = [Fixed rate + (2 x Semiannual inflation rate) + (Fixed rate x Semiannual inflation rate)]. There are charts on this website. Bonds still pass the sleep test; Madhoff doesn't get near these. Have a great day.
By Horace @ 03/12/09 09:04:37 AMreport abuse
Love ya Clark - but you blew this one
Interest rates on I bonds re-set every six months, so its not like buying a CD where you are stuck with whatever the current rate happens to be. Plus, current rates are much higher than the rates Clark posted.
By Jake @ 03/12/09 08:31:49 AMreport abuse
Clark is Clueless
The current I-Bond rate is 5.64%, not the .70% he indicate on his show. I would be glad to invest in any CD, MM, Mutual Fund that will guarantee me the same rate of return for 6 months. Someone would be better off buying the bonds and selling them earlier than 5 years if CD rates go up. Even when paying the penalty for the early cash in you still would be better off than investing in a 2 year CD for 3%
By Brian @ 03/11/09 08:45:28 PMreport abuse
last year you were gung ho on them
About this time last year you were proclaiming them a great deal, and convinced me to jump on them before the may rates went into effect...since i got them when the base rate was better i guess i just hold the ones I have and forget about buying more this year...but how soon you forget, just one year ago they were at a 2% base and with inflation indexes pushing 4% so I was earning 6% (at least for 6 months) I don't know what the inflation index in nov was, but they were a good buy last year until the base went to near nothing...how soon he forgets
By Dave @ 03/11/09 05:15:03 PMreport abuse
Bonds
What about Series EE/E bonds? Would they be a better deal?
By MrEd @ 03/11/09 03:00:00 PMreport abuse
I BONDS
CLARK,
ME AND MY HUSBAND HAVE BEEN BUYING I BONDS FOR SOME TIME NOW. OURS ARE PAYING 5.86% TO 5.94%. WE CAN STILL BUY THEM FOR OVER 5.5%. IS THIS NOT GOOD RIGHT NOW? MY DAUGHTER IS GETTING TO TURN A 2% CD INTO I BONDS. IS THIS NOT THE RIGHT THING TO DO RIGHT NOW?
By EDITH @ 03/11/09 07:55:15 AMreport abuse
I Bonds
The US Treasury website indicates the interest rate on I Bonds is higher than what you indicate. Their calculation is below. What're your thoughts?

Composite Earnings Rates
Fixed rates and semiannual inflation rates are combined to determine composite earnings rates. An I Bond's composite earnings rate changes every six months after its issue date. For example, the earnings rate for an I bond issued in March 1999 changes every March and September.

If you would like to find the composite rates your bonds are earning, try our online Savings Bonds Calculator.

Here's how the composite rate for I bonds issued Nov 2008 - Apr. 2009 was set:

Fixed rate = 0.70%
Semiannual inflation rate = 2.46%

Composite rate = [Fixed rate + (2 x Semiannual inflation rate) + (Fixed rate x Semiannual inflation rate)]
Composite rate = [0.0070 + (2 x 0.0246) + (0.0070 x 0.0246)]
Composite rate = [0.0070 + 0.0492 + 0.0001722]
Composite rate = [0.0563722]
Composite rate = 0.0564
Composite rate = 5.64%
By Sara @ 03/10/09 04:49:40 PMreport abuse

I Bonds Stop Paying Interest

I noiticed that my I Bonds have stopped growing in value. Between Sep 2009 and May 2010, the value of my bonds remain the same. No interest is added or compounded. First I thought that my SavingsBond Wizard (Treasury tool) was out of date, so I checked the Treasury Website. Sure enough, I-bonds that I bought in Sep 2000 do not pay any interest or grow in value between 9/2009 and 5/2010. Wonder why I did not hear anything about that in the news?

By Jeff Swain @ 11/07/09 12:28:14 PMreport abuse

what about I bonds now?

Now that the Obama circus has spent to thier hearts delight and mortgaged our future, people are starting to talk about hiper-inflation again. I even heard the Oracle of Omaha mention that inflation is inevitable (as well as the dramatic devaluation of the dollar). So wouldn't I bonds be a good investment now? Here is an excerpt from Buffet's editorial: While expressing his strong support for past governmental actions to stem the U.S. financial crisis, renowned investor Warren Buffett recently sounded strong warnings about the mushrooming federal debt and its long-term potential damage on the purchasing power of the U.S. dollar. In an August 19 editorial in The New York Times, Buffett expressed his deep concerns that the side effects of enormous "dosages" of monetary medicine may be "as ominous as that posed by the financial crisis itself."

Slowing down the government's dollar printing presses will require "extraordinary political will," according to Buffett. Legislators, highly reluctant to raise taxes or cut spending when hoping to get re-elected, will be tempted to opt for higher rates of inflation. Unchecked growth in government indebtedness would cause the purchasing power of the U.S. dollar to melt. Concludes Buffett: "The dollar's destiny lies with Congress."

By Peter @ 08/26/09 02:36:38 PMreport abuse

Why sell or not ?

I understand there is some penalty for a 5 year period, so it seems I should sell what i bought in 2003.
1) Are there any disadvantages to selling since there is 0% rate?
2) If not, why keep if you bought in 1998-2001, I thought the only advantage for the full term is that you stop earning after 30 years.
3) Why not sell anything and buy when things are better.

By gtyellowjacket @ 07/19/09 10:27:01 PMreport abuse

I-Bonds

Just in case this one slipped by Clark.
I have a big chunk in I bonds and was enjoying great returns (as high as 8.4%). Then July 1 the total rate dropped to 0.0% because we now have deflation which negates not only the inflation factor but also the socalled fixed portion of the interest rate. This could slip up on most people who buy bonds then never look at them. Hopefully the rate will return once we get back to our normal inflationary ways. It's a shocker anyway....
Ken

By KenPost @ 07/06/09 02:22:17 PMreport abuse

I bonds

I bought 10/2001 and using the bond wizard calculator it says right now I'm earning 7.99%?! Is it wrong because I heard Clark Howard on his video minute that everyone is earning 0 no matter when they bought it???

By Vivi @ 05/22/09 03:12:07 PMreport abuse

i bonds

i am ever so excited about earning 0% with the new may 2009 rates. guess i misunderstood. thought the fixed rate would never change. the trickery gov chose a -2+% which allowed them to make my interest rate now 0%. but i will keep them an extra 3 months at 0% before cashing them in so that i won't lose the 8%(3 months) i made until then as i have not owned them quite 5 yrs. it was good while it lasted.

By leslie cockrell @ 05/09/09 08:49:58 PMreport abuse

I Bonds - gene and Mark

gene - you are correct, the BOND WIZARD is a great tool to track your bonds and help you to understand how they work. But you still need more research to fully understand all the details involved with I-Bonds. Most people just don't want to bother and never really get there.

Mark - I too am anxious to see what the Treasury will set the fixed rate at in May. They don't seem to be interested in selling I-Bonds anymore. Proof of this is seen in the lower limits of $5,000 paper and $5,000 on line that now exist. Only chance of selling these things with the upcoming composite rate of 0% will be to entice us with a high fixed rate. I hope that's what they do as I expect the U.S. printing of money will cause some pretty high inflation rates in the years to come. So, give me a fixed rate of 3% or higher and I'll be happy to buy all I can using every member of my family. I've done very well on those I purchased in 1999 - 2001. Wish I could have bought more with that fixed rate of 3.6% back then. Back then we were even allowed to purchase the I-Bonds with reward credit cards. Made 1 1/2% just for buying using AMEX.

By Paul @ 03/27/09 01:59:26 PMreport abuse

Paul is one of the only people with his facts straight. By April 16 we'll know what the new semiannual inflation rate will be beginning May 1. For Sept thru Feb it's at -3.0%, so 1 more month won't come close to making this a positive number, which will wipe out the fixed rate for most existing bonds when their composite rates reset. If you buy before May and hold for only 12 months, your return will be about 3.2%(see my 3/22 note). Any guesses at what the Treasury will set the fixed rate at on May 1? It'll be kind of weird offering new bond with a grand 0% composite rate for 6 months.

By Mark @ 03/27/09 12:06:59 PMreport abuse

I-BONDS

go to treasury direct and download the BOND WIZARD

By gene @ 03/26/09 01:10:51 PMreport abuse

Bad news people

Many people assume an I-Bond can't pay less than the fixed rate. NOT TRUE! If we have deflation, it will wipe out part or all of the fixed rate. However the composite rate can't go below zero so at least we can't lose money.

We only have one more month left in the latest 6 month period which is used to calculate the composite rate and we are at negative 6% on an annual basis. Even if we have 1% inflation in this last month (March), we will still see negative 4% annualized. That means even those of us who have I-Bonds with a 3.6% fixed rate are going to see 6 months with a composite rate of 0%.

But then, most of us in the stock market would have loved to have seen the last 6 months where we made nothing and LOST nothing.

If anyone disagrees with what I've said here, feel free to go read the real story for yourself at the URL below.

http://ibond.gov/forms/savdc1-98.pdf

By Paul @ 03/25/09 02:52:01 PMreport abuse

10 years annuity

unfortunately lost in a 10 year annu
trusting my financial institute ted in I started in 2002 with 10000 and over the years put 6000 more but when I was 59 and half got out off it due to financial crisis but got only 14000/I

By audrey @ 03/25/09 12:13:57 PMreport abuse

The 2.46% figure

Some previous writers have questioned Clarks statement "If you buy them today, your total earnings could be as low as 2.46%."
Clark got the 2.46% figure from the current semi annual inflation rate.
It would be paid for 6 months then
re-adjust. Which is going to be next
to nothing. Add 2.46% (for the first 6 months) to 0% (the second 6 months) and you get a total of 2.46%. Hence, the statement by Clark.

By Alan @ 03/24/09 06:30:53 AMreport abuse

I-Bonds true annual rate

Clark is right on. The current rate for I-Bond is 5.64%. That is the annual rate (not semi-annual as some have claimed) which is good for only 6 months. The fixed rate is .70% and the variable rate is changing in May. We do not have high inflation now. In fact we now have deflation. The variable rate is going to be 0% or close to it. So, the I-bonds are only going to be paying the fixed rate portion. I-Bonds are going to have puny returns. Here's the link for the current rate. http://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm . When you are there and if you want to see the current fixed rate and inflation rate click on the following link in the left hand column. I Savings Bonds Rates & Terms I hope this clears it up.

By Alan @ 03/24/09 06:05:47 AMreport abuse

I think Clark is over extending himself in the same manner as the President. I believe he is a bit off with his I-Bond calculations.

By Sharon @ 03/23/09 06:13:47 PMreport abuse

Treasury bonds I Series

They changed the amount you could buy in 2008 or 2009. It's now ONLY $5,000 per person per year.
"Electronic: $5,000 per Social Security number per calendar year. Paper: $5,000 per Social Security number per calendar year."

By S.Y. DOVE @ 03/23/09 05:11:52 PMreport abuse

Vanguard Bonds

I am retired and after losing 1/2 my 401K in stocks, I said "I give up" and have put what's left in Vanguard government back bonds. Sure they only earn 4 1/2%, but even with inflation at 4%, I am NOT LOSING capital, which is a welcome change for me.

By Tiffiny Tennyson @ 03/23/09 04:41:09 PMreport abuse

Please Clarify

Whiat is the rate - Clark's or the posters? We need to know who is right!

By Ronnie @ 03/23/09 03:22:41 PMreport abuse

I Bonds Relative Rate of Return

What does your I bond rate of return compare to you 401-k even over the last 10 years? I-bonds are still the best buy for long term investments

By Charles @ 03/23/09 03:07:41 PMreport abuse

For those who bought in April 2008

If you bought I Bonds in April 2008 when Clark was telling you to buy, you will still do pretty good by holding on to them. It is new purchases that are a poor deal. I personally bought some in April 2008 and will sell them on January 1, 2010 when I get my last interest payment under the "inflationary" rates.

By Sean @ 03/23/09 02:12:35 PMreport abuse

I bond rates will PLUMMET in May

Because the variable portion of the I-bond interest is tied to CPI-U, rates will PLUMMET in May as CPI-U has been undergoing DEFLATION for several months. This means your TOTAL return will be your fixed portion (as low as 0.0% or 0.7%). And because these bonds require you to hold them for at least one year (five years if you want to avoid the early withdrawal penalty), you will be stuck with those PUNY rates for at least 6 months after your 6 months of ~5%.

By Sean @ 03/23/09 02:02:14 PMreport abuse

Are I bonds still a good deal?

bought Ibonds the max 5000 for me and 5000 hubby last year because Clark said it was a great deal the intrest is still better than a cd

By D @ 03/23/09 01:59:34 PMreport abuse

I bought them in 01, thanks thanks clark for the advice. they will help the kids when it's time for a downpayment on a house.

By abbey @ 03/23/09 01:12:52 PMreport abuse

I recall purchasing I-Bonds in 2003 because Clark was saying how great they
were. Now he says they haven't been so great since 2001????

By April @ 03/23/09 01:08:05 PMreport abuse

I bombs

Wish Clark had told me what to do with the $1200 per month I'm now sinking into I bonds. Guess I'll keep on doing the same thing.

By James @ 03/23/09 12:44:36 PMreport abuse

Clark, please set us straight here...

Clark (not one of his staff) needs to take a good look at this one again. First off, get the numbers straight, considering semi-annual rates. Based on Clark's urging, my wife and I bought the maximum amount allowed ($5K each) April 30, 2008 and now Clark is trashing the idea?

By David @ 03/23/09 12:24:27 PMreport abuse

I bought in 2001 with a 3% base plus rate of inflation. A Tremendous deal. Actually drawing over 7% now. Over 50% return since 2001. Agree now not a good deal. Also are limited to $5000 now. Then was 30,000. Double that including spouse.

By Dick @ 03/23/09 12:00:21 PMreport abuse

If you plan to hold new purchases just a year, your return will beat most CDs. The semi-annual rate is currently 5.64%. If you purchase on the last business day of March or April you will receive interest for the full month. After 6 months the composite rate will almost certainly be 0%, because the semi-annual inflation rate will wipe out the fixed rate. Sell the bond the first day you can (12 months after issue date) and you'll lose the last 3 months interest (which will be nothing). For the 11+ months you held the bond you will have received 2.82% (=5.64%/2), which is about 3.08% annualized. With no state taxes owed, this is equivalent to 3.24% in a state with 5% income tax - not great, but okay.

By Mark @ 03/22/09 01:46:05 PMreport abuse

I Bonds Rate

I just now saw Clark caution us on TV about I Bonds BUT we just purchased $10,000 @ 5.63. Yeah, it's until May BUT with the market going up, inflation will have to grow. Please have Clark update his thoughts as to why he feels the I Bond is a "NoNo". The 2.46% he quoted is a SIX MONTH RATE so the annual rate is twice that plus 0.07% fixed. Please update us, we all rely on his intellitect to keep us on the almost straight path to success!

By JimE @ 03/16/09 03:59:51 PMreport abuse

Return on I Bonds

I respectfully disagree with Mr. Howard on this. I Bonds seem to be a perfect place for my "money under the mattress."

They keep up with inflation (plus the fixed amount), income taxes are deferred until redemption (unlike my CD's), and there are no fees (unlike my mutual funds).

I'm not trying to be greedy with these investments. I'm looking for low risk with a return that meets or exceeds inflation.

I Bonds meet that objective.

By Dale @ 03/16/09 01:20:15 PMreport abuse

Bonds Redemption

When can u cash in Saving Bonds and how long must you hold on to them?

By Clay @ 03/16/09 07:52:24 AMreport abuse

The way I read this on treasurydirect.gov. that even for a zero fixed rate the inflation adjustment gives you a return for last June 08. Here is the calc from treasury direct:Composite rate = [Fixed rate + (2 x Semiannual inflation rate) + (Fixed rate x Semiannual inflation rate)]. There are charts on this website. Bonds still pass the sleep test; Madhoff doesn't get near these. Have a great day.

By Horace @ 03/12/09 09:04:37 AMreport abuse

Love ya Clark - but you blew this one

Interest rates on I bonds re-set every six months, so its not like buying a CD where you are stuck with whatever the current rate happens to be. Plus, current rates are much higher than the rates Clark posted.

By Jake @ 03/12/09 08:31:49 AMreport abuse

Clark is Clueless

The current I-Bond rate is 5.64%, not the .70% he indicate on his show. I would be glad to invest in any CD, MM, Mutual Fund that will guarantee me the same rate of return for 6 months. Someone would be better off buying the bonds and selling them earlier than 5 years if CD rates go up. Even when paying the penalty for the early cash in you still would be better off than investing in a 2 year CD for 3%

By Brian @ 03/11/09 08:45:28 PMreport abuse

last year you were gung ho on them

About this time last year you were proclaiming them a great deal, and convinced me to jump on them before the may rates went into effect...since i got them when the base rate was better i guess i just hold the ones I have and forget about buying more this year...but how soon you forget, just one year ago they were at a 2% base and with inflation indexes pushing 4% so I was earning 6% (at least for 6 months) I don't know what the inflation index in nov was, but they were a good buy last year until the base went to near nothing...how soon he forgets

By Dave @ 03/11/09 05:15:03 PMreport abuse

Bonds

What about Series EE/E bonds? Would they be a better deal?

By MrEd @ 03/11/09 03:00:00 PMreport abuse

I BONDS

CLARK,
ME AND MY HUSBAND HAVE BEEN BUYING I BONDS FOR SOME TIME NOW. OURS ARE PAYING 5.86% TO 5.94%. WE CAN STILL BUY THEM FOR OVER 5.5%. IS THIS NOT GOOD RIGHT NOW? MY DAUGHTER IS GETTING TO TURN A 2% CD INTO I BONDS. IS THIS NOT THE RIGHT THING TO DO RIGHT NOW?

By EDITH @ 03/11/09 07:55:15 AMreport abuse

I Bonds

The US Treasury website indicates the interest rate on I Bonds is higher than what you indicate. Their calculation is below. What're your thoughts?

Composite Earnings Rates
Fixed rates and semiannual inflation rates are combined to determine composite earnings rates. An I Bond's composite earnings rate changes every six months after its issue date. For example, the earnings rate for an I bond issued in March 1999 changes every March and September.

If you would like to find the composite rates your bonds are earning, try our online Savings Bonds Calculator.

Here's how the composite rate for I bonds issued Nov 2008 - Apr. 2009 was set:

Fixed rate = 0.70%
Semiannual inflation rate = 2.46%

Composite rate = [Fixed rate + (2 x Semiannual inflation rate) + (Fixed rate x Semiannual inflation rate)]
Composite rate = [0.0070 + (2 x 0.0246) + (0.0070 x 0.0246)]
Composite rate = [0.0070 + 0.0492 + 0.0001722]
Composite rate = [0.0563722]
Composite rate = 0.0564
Composite rate = 5.64%

By Sara @ 03/10/09 04:49:40 PMreport abuse

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Mar 10, 2009 -- Are I bonds still a good deal?

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