Did you realize that older I Bonds, issued before May 2008, are worth a lot more than what the Treasury will pay you if you cash them in before maturity? There’s no secondary market, but the fact is: These are gems you should hold.
I wrote this article for SeekingAlpha.com, and talk about which I Bonds you should target if you are fed up with deflation eating into your returns. And which I Bonds you should definitely hold. Hope you will click through and read it there:
WOW, what dedication (or compulsion). Appreciate your dedication. Taking a pass on this auction and will follow in secondary market…
Thank you for your posts and your website. With Tips becoming more interesting, your site has provided useful education to…
Thank you for thinking of your readership while on vacation, and taking time to post your thoughts so soon after…
I bought this CUSIP at its original offering, so yesterday I bought a 3-year TIPS on the secondary market with…
[…] this offering. The bid-t0-cover ratio was 2.28, well below the originating auction’s 2.79 on Jan. 19, 2023. That January…
Treasury Inflation-Protected Securities 
The thing with I bonds and deflation to consider, is that if there is significant deflation, the worst you can do is 0. Then if inflation explodes, you just start at 0 and basically capture all of the inflation with no deflation. A pretty good deal to me because of the 0 floor. In this way of thinking you can do better than inflation.
And that’s the one of the big advantages of I Bonds over TIPS, which lose principal during times of deflation. The other big advantages: tax deferral and flexible maturity.
Joe, excellent points. I’ll also be buying I Bonds this year, but probably after the November reset, and I hope the fixed rate inches up and not down. The tax deferral and flexible maturity make them excellent for retirement savings.
So you think you’ll be making a big lump sum purchase toward year end, figuring current numbers?
You’re information is impressive, tips.
Big lump sum = the max I can buy $10,000 per person in a calendar year. That’s the amount I buy every year. Last year, though, I redeemed some 0.0% I Bonds and replaced them with 0.1% bonds. So no net increase in holdings.
*your
First of all, the absolute good news is for us retirees with a fixed pension amount monthly, deflation is much better than inflation. Second, The principal of the bond cannot go below zero. Third, I believe Treasury is stingy in only allowing us to by $10,000 of Ibonds per year per spouse. So, I will buy our maximum amount in 2016 (at the end of the year of course) to enlarge the number of my Ibonds regardless. Fourth, even if the Ibonds pay a composite rate of zero, you are enlarging your principal amount to capture more inflation protection going forward. Two final points: ordinarily, I would not buy a thirty year a 30 year bond with a miniscule rate, but with Ibonds it is easy to get out of them and roll them over into new Ibonds when rates go higher. Lastly, inflation is merely hiding, it has not gone away for good, there is a historic amount of liquidity worldwide bottled up out there that will one day be unleashed. Thanks again for your articles. Joe