Picking up Nickels

Friday, March 14, 2008

February 2008 Series I Savings Bond update

The U.S. Bureau of Labor Statistics released the February 2008 Consumer Price Index (CPI-U) inflation data this morning, which increased by 0.29% since last month.

This number is relevant for I Bonds since the variable interest rate portion of I Bonds is determined by the semiannual CPI-U rate. Now that the February 2008 CPI-U data is out, we only need the March 2008 CPI-U data (to be released on April 16th) to determine the initial variable interest rate for I Bonds issued on May 1, 2008. And as I've mentioned before, the date of release of the March and September CPI-U numbers are the best times to consider purchasing I Bonds since we know what the rate of return for April and October issue I Bonds, respectively, will be for both the first and second six month periods that they must be held.

As an example, let's assume that the March 2008 CPI-U number remained unchanged from the February 2008 number released today. Using the CPI-U data from February 2008 (211.693) and September 2007 (208.49) (courtesy of inflationdata.com), we can calculate the variable rate for the second 6 month period for April 2008 issue I Bonds:

That would mean these bonds would earn a rate of 4.28% (using 1.20% fixed & 3.06 variable) for the first 6 months and 4.30% (using 1.20% fixed & 3.07% variable) for the second 6 months. For the first time since October 2005, I Bonds are once again looking like an attractive investment at this rate, since the yield on equivalent 1 year CDs should continue to be in a free fall once the FOMC cuts rates again on March 18th.

One major downside to purchasing I Bonds is that the Treasury cut the annual purchase limit to $5000 per social security number, effective January 1st, 2008. Under the new rules, you still can purchase $10,000 worth of I Bonds by purchasing $5000 in paper bonds at your local bank in addition to the $5000 in electronic bonds that can be purchased online at treasurydirect.gov. There have been reports that it is still possible to purchase up to the old limit of $30,000 at the TreasuryDirect web site, but if you plan on doing that you should act soon since that loophole may be closed at any time.

Wednesday, March 12, 2008

March 2008 Financial Asset Roundup

Here are my current financial assets as of the market close on March 11th, 2008:

Asset February 2008 March 2008 Change
Checking 734 854 120
Money Market 20,805 22,710 1,905
Savings Bonds 4,669 4,685 16
Treasury Bills 0 0 0
CDs 98,364 98,785 421
Brokerage 97,491 96,963 -528
401k 95,491 95,537 46
Roth IRA 31,223 31,193 -30
SEP IRA 171,304 179,433 8,129
529 Savings 36,240 36,181 -59
Credit Card 0% Balance Transfers 0 0 0
Total Assets $556,321 $566,341 $10,020 (1.80%)

The market volatility has continued since my last update, with the S&P 500 index falling by another 2.09% during that time:

(chart courtesy of msn.com)

It's been another wild ride over the past month. The FOMC tried another liquidity injection and could follow that up with more rate cuts at their March 18th meeting. The increasing risk of inflation is finally being acknowledged and oil is continuing a climb toward $110 per barrel. My personal increase in financial assets over the past month can primarily be attributed to my final 2007 SEP IRA contribution, but the only other money move on the short term horizon is dealing with the proceeds from a Bank of America 5.15% APY 4-month CD that matures at the end of the month. For that money, it is looking like putting some cash in I Bonds could once again be an attractive choice when the March 2008 CPI-U numbers are released on April 16th.

And of note on the personal recession watch, it appears that I am about to lose one of the largest clients of my IT services S Corporation. That is particularly noteworthy for me since the same thing happened to me in 2001 during the last recession. Fortunately, I have a nice cash cushion on hand for just such an occasion, although it would be a shame if I had to forfeit some interest by breaking some of those 6% APY CDs that I've been accumulating over the past two years

Monday, March 03, 2008

Free Gillette Razors at CVS Pharmacy this week

CVS Pharmacy once again has free in-store deals for a Gillette Fusion Razor and a Gillette Venus Razor.

CVS has the Gillette Fusion Phenom and Gillette Venus Embrace razors on sale for $9.99 this week. They are also offering a $6 Extra Bucks bonus for each (prints out immediately after purchase), bringing the cost down to $3.99 each. This price combined with the $4 off any Gillette Fusion Razor coupon from the 2/10 Proctor & Gamble coupon booklet and the $4 off any Gillette Venus Embrace Razor coupon from the 3/2 Proctor & Gamble coupon booklet will make both of these razors free.