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Originally Posted by woj
What's the catch here? Have you actually bought these? Why would anyone buy coorporate bonds that yield less than that? Or buy cds that yield about half that? And why would normal treasury bonds pay 4.5% while this pays 6.5%?
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It's a US government bond, not a whole lot of room for scamming. The I-Bond rate consists of 2 components. A fixed interest rate you get for the life of the bond, and an adjustable interest rate based on the current inflation index. The adjustable rate changes every 6 months. Downsides are the 1 year minimum holding period (if you cash out before 5 years you forfeit your last 3 months of interest).
From
http://www.publicdebt.treas.gov/sav/sbirate2.htm
Note the lowest interest rates in the last 8 years have been basically tied to when the federal prime rate was at its low. Meaning presumably in May rates should increase since we've had some nice sized rate hikes in the last 6 months. If anyone has some older data than this maybe there's a catch somewhere but thus far it seems like they beat other bonds by a few percentage points.
NOV 2005 - APR 2006 6.73%
MAY 2005 - OCT 2005 6.93%
NOV 2004 - APR 2005 6.73%
MAY 2004 - OCT 2004 6.73%
NOV 2003 - APR 2004 6.83%
MAY 2003 - OCT 2003 6.83%
NOV 2002 - APR 2003 7.35%
MAY 2002 - OCT 2002 7.76%
NOV 2001 - APR 2002 7.76%
MAY 2001 - OCT 2001 8.79%
NOV 2000 - APR 2001 9.20%
MAY 2000 - OCT 2000 9.40%
NOV 1999 - APR 2000 9.20%
MAY 1999 - OCT 1999 9.09%
NOV 1998 - APR 1999 9.09%
SEP 1998 - OCT 1998 9.20%