joetaxpayer wrote:

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Thx for your reply. I already have plenty of $$$ in stock mutual funds
and IRA's and my 401(k) is fully funded, as well. My thinking with the
I-bonds was automatic "forced" savings in a secure investment that
provides me some discipline. In other words, I have to make a somewhat
extra effort to cash out a savings bond. A MM account with a debit card
(which I already have) is much easier to tap into frivolously. I
already own a home and am just saving (and investing) generally towards
retirement.

"Sgt.Sausage" <nobody[at]nowhere.com> wrote
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I think this depends on how one defines "market timing" and
"top of the market." Academic Ben Graham decades ago
advocated, among other things, waiting until a stock's P/E
fell below 15. The market can hit new highs, including
somewhat high P/E's, and continue rising for over a decade,
with earnings continuing to rise so P/Es do not get too
high. E.g. from Yale academic Robert Shiller's data:

Year P/E S&P 500
1990 15.9 340
1991 20.5 325
1992 21.8 416
1993 19.9 435
1994 15.5 473
1995 13.7 465
1996 15.9 614
1997 19.3 766
1998 25.6 963
1999 25.9 1248
2000 28.5 1425

In 1991, your counsel would seem to be to stay out of
stocks. Mine, to passive investors and with regard to only
P/E's and with the S&P 500 P/E at 18 right now, I'd say the
market is a little high compared to the historical average
right now, but not obscenely so. If an investor buys into
the S&P 500 today, and then it "corrects" downward by 25% in
the next six months, and s/he regrets the investment, then
s/he should not be in stocks at all. S/he should have gone
in knowing this was a long term investment; reinvested
dividends are going to buy up great deals after the
"correction"; perfectly timing when to buy and sell is
strictly about luck; etc.

joetaxpayer wrote:

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Inflation has been running close to 4% since February:
http://inflationdata.com/inflation/I...Inflation.aspx
(the average rate over the past six months, using this data, is ~3.9%).

That means that after six months, these "bonds" will be paying around
5.3%, or similar to a MMF. So the up front cost of getting these
instruments now is bounded.

The virtue of getting them in this cycle (and enduring the lower yield
for six months) is that one locks in the highest fixed rate in four
years. I don't expect the fixed rate to rise, since people have gotten
better educated on inflation-adjusted instruments. To the contrary, the
fixed rate may fall, because people seem to look at total yield which
will rise (because of higher inflation) even as the fixed rate drops.
http://www.treasurydirect.gov/indiv/...esandterms.htm

An additional benefit is that the income is tax-deferred and state tax
exempt, unlike the higest yielding MMFs. Yet another benefit is that
the earnings may be entirely tax free if used for higher education
expenses.
http://www.treasurydirect.gov/indiv/..._education.htm

(though a 529 plan might be superior if this is the purpose).
http://www.cbsnews.com/stories/2006/...n2008154.shtml

Why not a stock fund? Because there is a difference between saving
(which I think of as an account where one's total balance is secure and
nominally liquid, except for a small early withdrawal penalty), and
investing. It depends on what one is trying to accomplish.

--
Mark Freeland
BnetOnewsX[at]sbcglobal.net

"joetaxpayer" <joetaxpayer[at]nospam.com> wrote in message
news:RqGdnbPMLcqWwrvYnZ2dnUVZ_v-dnZ2d[at]comcast.com...

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I know y'all here don't like the idea of Market Timing ... however it
should be noted that if someone were to convert existing bonds to
stocks right now, s/he'd be buying in at a "top of the market" time. The
U.S.
markets have been on a tear the last week and the DJIA has topped
all-time highs.

Just some info. Not trying to swing you one way or the other
for or against stocks.

bo peep wrote:

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Well, I recall, incorrectly it seems, that 'savings bonds' were
purchased at 1/2 face value, and were then held to maturity. 5% would
require 14 years to double.
This is closer to what I was thinking;
"Series EE Bonds earn market-based rates that change every 6 months.
There is no way to predict when a Series EE bond will reach its face
value. For example, a Series EE Bond earning an average of 5% would
reach face value in 14 1/2 years while a bond earning an average of 6%
would reach face value in 12 years."

Now that I am better educated, I ask, with the I bonds yielding 1.4%
over inflation, which the government claims is 1% for 9/05 through 3/06
or a total yield of 2.4%, why not just save in a money market fund? or
stock funds as I suggested earlier.
JOE

joetaxpayer wrote:
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You can cash in I bonds after 12 months, with a 3 month interest
penalty if less than 5 years. The maturity date is 20 years with an
automatic 10 year extension. What is significance of the 14 year period
you mentioned?

John Cowart

BRH wrote:
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For future purchases, your company's payroll dept. should be able to
help. For bonds you own, are they in your possession? You should be able
to send a form in to the treasury to update the info.

You know, I won't be the first to ask, if you are willing to buy an
instrument with such a long maturity (14years?) why not consider putting
this money in the stock market instead? But that opens up the list of
questions, the things we don't know about you; does your company have a
401k? Does it have a matching feature? Are you saving for any short term
purchases? Own a home? etc.
JOE

I have a biweekly payroll deduction for the purchase of US Savings Bond
(Series I), and I have ny niece's name listed on each bond as
beneficiary. She has since married. Do I need to update the
beneficiary info to reflect her married name? If so, how would I go
about doing that (both for future bonds and for already-purchased bonds).

Thanks!