with ibonds being near 10% and the stock market doing terrible i was considering moving money from my navy federal card with a vey low intro apr to the navy federal prepaid (which doesnt count as a cash advance) and then putting some money into the ibond to let it grow for at least a year.
Anyone here have any input and/or knowledge on ibonds.
Apprecaite it.
I bought in May, and went away
Will probably cash out at the one year mark?.. and take the 3 month interest penalty
But, will have to see where things are at in the **bigger picture** at that time.
Was a good place to park $10K
More info on i-Bonds can be found here;
-> https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm
@Anonymalous wrote:
iBonds won't make you money. They're pegged to the CPI-U, and the various CPIs have been tweaked over the years so they no longer represent the true inflation rate. So you're losing real value, but less than you would if the money was parked in even the highest APR savings account.
@Anonymalous, In reading your forum post(s) ..You seem to be well versed in finances
It is true about CPI's being tweaked, as they have not been very truthful over the last couple of decades.
There are a lot of things, not calculated into those #'s.
I learned that about 20 years ago, on a Gold forum ...when $GOLD was $370 per oz.
Even with the price of Gold down over the last 6 months (or dollar up) which BTW won't last forever!
Over 20 year period, still relatively up.
Sometimes the way you make Money, .."Is not to lose it" - M_Smart
@M_Smart007 wrote:
@Anonymalous wrote:iBonds won't make you money. They're pegged to the CPI-U, and the various CPIs have been tweaked over the years so they no longer represent the true inflation rate. So you're losing real value, but less than you would if the money was parked in even the highest APR savings account.
@Anonymalous, In reading your forum post(s) ..You seem to be well versed in finances
It is true about CPI's being tweaked, as they have not been very truthful over the last couple of decades.
There are a lot of things, not calculated into those #'s.
CPI is inherently hard to calculate, because the basket of goods used to calculate it has to change over time (it makes no sense to include a VCR today, for instance), and those swaps are inherently subjective. On top of that, it's very hard to assess the value of technological innovations. The TVs of today are much better and more sophisticated than the TVs of the 1970s, but how can we put a number to the increased value of 4K resolution, full color, deeply saturated, thin screen, energy efficient, smart devices? But the biggest sin is they no longer use a fixed basket of goods, like they did in the 1970s. Instead, they use substitutions, under the logic that, when things get tight, people cut back on expensive items and buy more cheap items. So if beef jumps in price, they start replacing some of the costly beef in the basket with cheaper chicken. This keeps the official inflation number lower than before they made the change, but essentially assumes you're switching to a lower standard of living.
iBonds are frequently promoted as maintaining the value of your money in the face of inflation, but that's not really true because of this chicanery in how CPI is calculated. Though while I challenge that specific assumption, I'm not arguing against iBonds. They're still an excellent option, in many cases. And now's the time, because buying them before October 28th will lock in the 9.62% rate for 6 months.
@Anonymalous wrote:
@M_Smart007 wrote:
@Anonymalous wrote:iBonds won't make you money. They're pegged to the CPI-U, and the various CPIs have been tweaked over the years so they no longer represent the true inflation rate. So you're losing real value, but less than you would if the money was parked in even the highest APR savings account.
@Anonymalous, In reading your forum post(s) ..You seem to be well versed in finances
It is true about CPI's being tweaked, as they have not been very truthful over the last couple of decades.
There are a lot of things, not calculated into those #'s.
CPI is inherently hard to calculate, because the basket of goods used to calculate it has to change over time (it makes no sense to include a VCR today, for instance), and those swaps are inherently subjective. On top of that, it's very hard to assess the value of technological innovations. The TVs of today are much better and more sophisticated than the TVs of the 1970s, but how can we put a number to the increased value of 4K resolution, full color, deeply saturated, thin screen, energy efficient, smart devices? But the biggest sin is they no longer use a fixed basket of goods, like they did in the 1970s. Instead, they use substitutions, under the logic that, when things get tight, people cut back on expensive items and buy more cheap items. So if beef jumps in price, they start replacing some of the costly beef in the basket with cheaper chicken. This keeps the official inflation number lower than before they made the change, but essentially assumes you're switching to a lower standard of living.
iBonds are frequently promoted as maintaining the value of your money in the face of inflation, but that's not really true because of this chicanery in how CPI is calculated. Though while I challenge that specific assumption, I'm not arguing against iBonds. They're still an excellent option, in many cases. And now's the time, because buying them before October 28th will lock in the 9.62% rate for 6 months.
What you are describing is chained CPI. The vast majority of time when inflation and CPI is mentioned it is not chained CPI. Chained CPI is also not used for i-bonds. There is nothing being kept "artificially low". It is just one more measure of inflation.
@GatorGuy wrote:
@Anonymalous wrote:
@M_Smart007 wrote:
@Anonymalous wrote:iBonds won't make you money. They're pegged to the CPI-U, and the various CPIs have been tweaked over the years so they no longer represent the true inflation rate. So you're losing real value, but less than you would if the money was parked in even the highest APR savings account.
@Anonymalous, In reading your forum post(s) ..You seem to be well versed in finances
It is true about CPI's being tweaked, as they have not been very truthful over the last couple of decades.
There are a lot of things, not calculated into those #'s.
CPI is inherently hard to calculate, because the basket of goods used to calculate it has to change over time (it makes no sense to include a VCR today, for instance), and those swaps are inherently subjective. On top of that, it's very hard to assess the value of technological innovations. The TVs of today are much better and more sophisticated than the TVs of the 1970s, but how can we put a number to the increased value of 4K resolution, full color, deeply saturated, thin screen, energy efficient, smart devices? But the biggest sin is they no longer use a fixed basket of goods, like they did in the 1970s. Instead, they use substitutions, under the logic that, when things get tight, people cut back on expensive items and buy more cheap items. So if beef jumps in price, they start replacing some of the costly beef in the basket with cheaper chicken. This keeps the official inflation number lower than before they made the change, but essentially assumes you're switching to a lower standard of living.
iBonds are frequently promoted as maintaining the value of your money in the face of inflation, but that's not really true because of this chicanery in how CPI is calculated. Though while I challenge that specific assumption, I'm not arguing against iBonds. They're still an excellent option, in many cases. And now's the time, because buying them before October 28th will lock in the 9.62% rate for 6 months.
What you are describing is chained CPI. The vast majority of time when inflation and CPI is mentioned it is not chained CPI. Chained CPI is also not used for i-bonds. There is nothing being kept "artificially low". It is just one more measure of inflation.
Excellent point.
The United States Chained Consumer Price Index (C-CPI-U), also known as chain-weighted CPI or chain-linked CPI is a time series measure of price levels of consumer goods and services created by the Bureau of Labor Statistics as an alternative to the US Consumer Price Index. It is based on the idea that when prices of different goods change at different rates, consumers will adjust their purchasing patterns by purchasing more of products whose relative prices have declined and fewer of those whose relative price has increased. This reduces the cost of living reported, but has no change on the cost of living; it is simply a way of accounting for a microeconomic "substitution effect." The "fixed weight" CPI also takes such substitutions into account, but does so through a periodic adjustment of the "basket of goods" that it represents, rather than through a continuous adjustment in that basket. Application of the chained CPI to federal benefits has been controversially proposed to reduce the federal deficit.