Savings/investments/bonds Master Thread.

[Shaya E]

I know some are waiting to buy I-bonds at the end of the month for their 10k 2023 allotment. Is that a good idea with rates looking like they are going to drop big time? Is the party over?

The party is definitely winding down, but I wouldn't call it over. Depending on what you would otherwise do with the money it could still make a lot of sense to buy. If you buy at the end of the month you effectively only lock it up for 11 months and are guaranteed 6 months at the current 6.89 rate and 2 months at whatever the next rate would be plus 0.4. I can't imagine it'll be less than 3.5 blended rate. I'll leave it to someone else to do the math but I feel like that's a pretty good guaranteed return with the possibility of being even higher.

[CountValentine]

Math would be interesting as you can get 4.6-4.7 on 1 year t-bills.

[gozalim]

worth waiting until closer to the next update term?

[CountValentine]

worth waiting until closer to the next update term?

That is my approach for my trust accounts as other accounts were already bought last year for this year (gift).

[nucheiner]

That is my approach for my trust accounts as other accounts were already bought last year for this year (gift).

Smart. LIKE. Just an explainer. If the rates drop to say 2.5, you will be better off withdrawing and putting it elsewhere (in the case that either Treasuries or High Yield Savings remain high as these aren't directly ties to inflation numbers). However you will get hit with a three month penalty at the current rate at the time of withdrawal. So at this time the math is: 6M@6.69% + 6M@3.5%?? - 3M@2.5??=__

However if you wait until there is a solid estimate of what the rate will be for the next half you will have a better idea  of your return.

[ShimshonK]

I know some are waiting to buy I-bonds at the end of the month for their 10k 2023 allotment. Is that a good idea with rates looking like they are going to drop big time? Is the party over?

I haven't looked at the numbers in depth, but IIRC, the last 3 months CPI-U were ~0% month over month. Which means we are on pace for a 0% variable rate (plus current fixed rate of .4%). Combined with the fact that there are other strong options now in the 3-5% range, I wouldn't tie up new money at these rates. At least wait until mid-April when we'll have all 6 months of CPI data to make that decision.

[ExGingi]

https://twitter.com/realEstateTrent/status/1615378300343549952

[CountValentine]

How did he only get 4.47%?
Only actions today were 13 and 26 week bills and both were higher.

[mlight]

Sorry for newbie question. Would like to get in on some t bills. I currently only have an account with robinhood. Should I he opening a schwab account and if so which one? Seems like there are so many options of accounts to open with them...

[CountValentine]

Sorry for newbie question. Would like to get in on some t bills. I currently only have an account with robinhood. Should I he opening a schwab account and if so which one? Seems like there are so many options of accounts to open with them...

You can't buy t-bills on Robinhood.
Schwab you would just open a brokerage account.

[ExGingi]

How did he only get 4.47%?
Only actions today were 13 and 26 week bills and both were higher.

Probably secondary market.

The point in posting this (which I could have posted in Real Estate investments thread or in Stocks thread) was that there really needs to be a substantial reward potential in order to take risk nowadays.

[CountValentine]

Probably secondary market.

The point in posting this (which I could have posted in Real Estate investments thread or in Stocks thread) was that there really needs to be a substantial reward potential in order to take risk nowadays.

Point taken and I agree.
I would find a different source as even in the secondary market rates are not that low. 

[Joe4007]

Probably secondary market.

The point in posting this (which I could have posted in Real Estate investments thread or in Stocks thread) was that there really needs to be a substantial reward potential in order to take risk nowadays.

That is absolutely true. Counter point is that if rates drop considerably, you won't be able to roll t-bills while real estate will likely have gone up.

[CountValentine]

That is absolutely true. Counter point is that if rates drop considerably, you won't be able to roll t-bills while real estate will likely have gone up.

Sell the t-bills and then buy real estate. Problem solved. 

[ExGingi]

Sell the t-bills and then buy real estate. Problem solved. 

Actually, in such a scenario there would also be a capital gain on the t-bills, as price goes up when yields go down.

[Joe4007]

Sell the t-bills and then buy real estate. Problem solved. 

Only at that point, you've missed the uptick.

Actually, in such a scenario there would also be a capital gain on the t-bills, as price goes up when yields go down.

Don't think there's enough duration in the t-bills we're discussing to make that a factor. 

[ShimshonK]

https://twitter.com/realEstateTrent/status/1615378300343549952

This is ridiculous.
Real estate investments are in a totally different category to T-bills (and they both have their place in a portfolio).
Real estate offers easy access to strong leverage to turn a 5% cap into a 15%+ IRR.
And a going-in 5% cap by and large climbs upwards as the months/years go on.
And most multifamily investment properties nationwide are currently trading in the ~6% cap range (other asset classes, even higher), not 5%.

And the T-bill investment is a 13 or 26 week investment, as opposed to a 5-10+ year RE investment.
(Risk adjusted return is a very valid and important part of analyzing property investments, but this tweet ain't it chief.)

[mlight]

When is the next opportunity (auction?) to buy some t bills?

[Dan]

I know some are waiting to buy I-bonds at the end of the month for their 10k 2023 allotment. Is that a good idea with rates looking like they are going to drop big time? Is the party over?

Gotta wait for April numbers I think.

[Dan]

Oops, we didn't see this coming.
It Pays to Procrastinate: The New 6.89% I bonds Will Beat the Old 9.62% Bonds in Just 4 Years
https://www.msn.com/en-us/money/realestate/it-pays-to-procrastinate-the-new-6-89-i-bonds-will-beat-the-old-9-62-bonds-in-just-4-years/ar-AA14ESZD?ocid=msedgdhp&pc=U531&cvid=456d514d286247cb9a9c3e73f60788ee

Frustrating that they don't announce the rates in advance. Makes it tough to plan properly.