I previously explored my journey with buying Series I Savings bonds here and here. With May’s interest rate adjustment down to 4.3%, I decided to sell the bonds that I owned. In today’s video blog, I share the rationale behind my move and how I think about the best place to put my money.
Video Notes
Series I Bonds Before/After
Inflation-linked bonds.
Fixed-rate component & inflation component (adjusted every 6 months)
7.12%, then 9.62%: Risk-Free
$10k per person annually
$10,000 around December 2021.
Grew by about $975 over the past 16 months.
$975 / $10k = 9.75% over 16 months = 7.31% annualized return
Takeaway #1: Tyler is pleased with the rate of return on an absolute & relative basis.
Takeaway #2: Alternatives:
- Savings account/T-bills: 3%
- SPY: -12% overall, or about 8% annualized
- IEF: -10% overall
- GLD: up 10% overall, or about 7.5% annualized
At 4.30%, the rate has dropped low enough to make other alternatives more interesting.
Takeaway #3: The hurdle to beat Series I Bonds has been lowered dramatically.
Alternative A: Treasury bill yields 5.2%ish
Alternative B: Buy diversified basket of equities that historically grown at 8% to 10% a year.
Alternative C: Trading system (selling naked puts on Index ETF) that has the potential to yield 12%+ a year.
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