Picking up Nickels

Tuesday, October 18, 2016

September 2016 CPI-U numbers released: November 2016 I Bonds are a buy!

The U.S. Bureau of Labor Statistics released the September 2016 Consumer Price Index (CPI-U) inflation data this morning, which increased by 0.24% last month.

As always, now is one of the best times to consider purchasing I Bonds. The reason for this is that we now know what the rate of return for October 2016 I Bonds will be for both the first and second six month periods, which is important since I Bonds must be held for 12 months before they can be redeemed.

Using the CPI-U data from March 2016 (238.132) and September 2016 (241.428) (courtesy of inflationdata.com), we can calculate the variable rate for the second 6 month period for October 2016 issue I Bonds.

That means these bonds would earn the current anemic rate of 0.26% (using 0.10% fixed & 0.08% variable) for the first 6 months and 2.86% (combined 0.10% fixed & 1.38% variable) for the second 6 months. It goes without saying that it makes sense to wait until November to make the purchase to avoid six months of 0.26% interest. Even though we only know the interest rate for the first six months of November 2016 Series I savings bonds, a minimum composite rate of 2.76% (assuming a 0% fixed portion) is market beating when compared to short term investments like the 1 year CD @ 1.30% APY currently being offered at Everbank.

I will personally be buying the maximum amount from treasurydirect.gov in November since I haven't made any online I Bond purchases so far 2016. In fact, a 2.76% rate is so attractive in this environment that I will probably purchase even more in January 2017.

Wednesday, October 12, 2016

October 2016 Financial Asset Roundup

Here are my current financial assets as of the market close on October 11th, 2016:

Asset Sep
Checking 1,123 1,244 121
Money Market 82,348 82,260 -88
Savings Bonds 109,538 109,663 125
Treasury Bills 0 0 0
CDs 39,447 39,555 108
Brokerage 128,940 123,083 -5,857
401k 133,788 131,906 -1,882
Roth IRA 112,682 111,871 -811
SEP IRA 564,930 560,487 -4,443
529 Savings 142,986 143,297 311

Total Assets $1,315,782 $1,303,366 -$12,416

The S&P 500 continued to fall since the last update, dropping 1.03% during that time:

(chart courtesy of yahoo.com)

On the jobs front, the unemployment rate for September rose slightly to 5.0% with 156,000 new jobs were created. Oil prices have continued to rise to the $51 level as OPEC has agreed to production cuts.

On the financial front, it is almost time to decide on a Series I savings bond purchase. The September CPI-U inflation numbers are due out next week, and the data should validate the position that waiting until November to make the purchase is the way to go.

On the non-financial front, thankfully there isn't much to report. The weather is changing (A/C is off, heat is on) and I have been taking advantage of the cool Fall weather to try to get my lawn whipped into shape for next year. Winter is coming!