I haven't been around much lately, life with two kids is really busy. We've had our debt-reduction on auto-pilot, and it is going well. We closed on a refi of the apartment building in August, our loan is now fixed for 30 years at 5% (down from 5.75%, which was down from 6.79%). The apartment is cash flowing very nicely right now, hopefully it stays that way.
We are approaching the end of our debt-reduction and starting to make plans for building a large emergency fund. I'm strongly considering putting that e-fund in i-bonds, at least for the short term. There are a few things about the recent i-bond rates that are attractive to me...
1. If we buy before Nov 2011, the rate for six months is 4.6% (all variable, fixed is 0%)
2. The second six months is shaping up to be around a 2% rate
3. The early redemption penalty for redeeming them before 5 years (but it has to be after 12 months) is 3 months interest
4. Interest is state and federal tax free if the bond is rolled into a 529 or used for education
There are cons, such as the clunkiness of the Treasury Direct site, the hassle factor of rolling them into a 529, and the uncertainty regarding the variable rate. So we're still weighing our options. CDs would be a much simpler option, but with a potentially lower return.
1 comments:
I'd invest in some i-bonds if I could. If I understand it correctly, it sounds like I can buy some now and just cash out after a year and still guarantee myself a pretty good return of about 3%, while insuring myself against inflation.
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