aav_2202 OP t1_j2covog wrote
Reply to comment by wolf8sheep in Best place to put 'invested' cash? CDs, high-yield savings, t-bills/bonds? Where have you found the best rates? by aav_2202
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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