Picking up Nickels

Wednesday, October 17, 2018

September 2018 CPI-U numbers released: Neutral on November 2018 I Bonds

The U.S. Bureau of Labor Statistics released the September 2018 Consumer Price Index (CPI-U) inflation data last week, which increased by 0.12% over the past 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 2018 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 2018 (249.554) and September 2018 (252.439) (courtesy of inflationdata.com), we can calculate the variable rate for the second 6 month period for October 2018 issue I Bonds.

That means these bonds would earn the current rate of 2.52% (using 0.3% fixed & 1.11% variable) for the first 6 months and 2.62% (combined 0.3% fixed & 1.16% variable) for the second 6 months. IMO, the current 2.52% rate doesn't really make an October purchase terribly appealing unless you believe that the 0.3% fixed portion will go down next month. At this point, I believe an I Bond purchase is a basically a wash when compared to something like the 1 year CD @ 2.65% APY currently being offered at Live Oak Bank.

Having already maxed out my 2018 purchase limit in January (as I did in 2017), I can't act on these anyway. As always, I will continue to evaluate them and see what makes sense for me in 2019.

Thursday, October 11, 2018

October 2018 Financial Asset Roundup

Here are my current financial assets as of the market close on October 10th, 2018:

Asset Sep
Checking 1,198 275 -923
Money Market 66,893 48,484 -18,409
Savings Bonds 155,168 155,493 325
Treasury Bills 5,000 6,000 1,000
CDs 29,695 39,806 10,111
Brokerage 163,709 159,074 -4,635
401k 170,782 167,894 -2,888
Roth IRA 155,158 150,469 -4,689
SEP IRA 789,634 756,094 -33,540
529 Savings 176,470 174,454 -2,016

Total Assets $1,713,707 $1,658,043 -$55,664

The market had remained relatively flat since the last update until recent interest rate worries, with the S&P 500 falling 3.18% during that time:

(chart courtesy of nasdaq.com)

On the jobs front, the unemployment rate for September fell to 3.7%, the lowest since December 1969. Oil prices have climbed a bit to the $72 level (up from $67). And for the second month in a row, we have a hurricane (Hurricane Michael) hitting the continental US. Once again, my best to everyone impacted by this huge storm.

On the financial front, I continued to flirt with 28 day T-Bills by putting some money into bills with an investment rate of 2.138%. To mix thing up a bit, I also put some cash into a Alliant 2.65% APY 12 month CD (my first non-Penfed CD in years). I'm also about due for another equity distribution from my S Corp, which I might use to dabble in T-Bills a bit more.

As for the non-financial, the weather has been cooling off and everyone is busy with work and school. Oh, and my lawn is looking good as my hard work has paid off. :)