wolf8sheep t1_j2b6uoi wrote
I bonds.
10k per person per year at the current rate of 6.89% where anything lower is losing to inflation. Thats 20k for 2023 as you likely missed out on having it processed for this year which you would have been able to park 40k in between December and January. They are liquidable after 1 year and you lose the last 3 months interest unless you hold it for 5 years. But depending on when you need the cash and when the consumer price index drops you can hold them for longer.
Just remember that I bonds don’t make you money they are capital preservers. Literally anything making less than an I bond is losing to inflation.
As for a more liquidable account I am a fan of nerdwallet and they rate SoFi banking as one of the best since they offer a checking account at 2.5% when you set up direct deposit plus a savings account at 3.5%. As far as I know SoFi is the only FDIC checking account offering that amount of APY although it is likely so they can attract market share and will not be sustainable long term.
aav_2202 OP t1_j2covog wrote
Thank you! I kicked myself for missing the 9.62%, and wasn't sure if the 6.89% was still enough, assuming the rate drops in May and knowing we would likely liquidate at 1y and be hit with the 3 month penalty.
It looks like we might be able to still purchase for 12/31/22, and we had considered purchasing in the names of our two daughters as well. So in that case, we'd have 80k earning the 6.89% for the next 6 months, then essentially we'd get three months of interest at the May 2023 rate (assuming we liquidate at 1y mark)? I know it's dependent on inflation, but is there any speculation as to whether the rate may hold steady when it resets in May or if it's more likely to drop?
wolf8sheep t1_j2ecmjb wrote
We can only hope that the cpi drops to the fed’s targeted 2% as quickly as possible since I bonds only preserve capital. Although from my readings it is likely to drop more slowly over the next 1-3 years.
Historically speaking one article I was reading about the fed’s approach during the inflation period of the 70’s to 80’s was they eased off rate hikes too early only to raise them again. No real good option though since the article also said that once the fed actually breaks the economy their hand is forced to ease off the rate hikes.
Consider too that if inflation does drop to 2% in May your money doesn’t lose purchasing power except for the last 3 months of interest if cashed out before 5 years. Right now everything not matching an I bond is losing its purchasing power.
aav_2202 OP t1_j2ed5dw wrote
This is very helpful, thank you so much! :)
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