Picking up Nickels

Friday, October 18, 2019

September 2019 CPI-U numbers released: Neutral on November 2019 I Bonds

The U.S. Bureau of Labor Statistics released the September 2019 Consumer Price Index (CPI-U) inflation data last week, which increased by 0.078% 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 2019 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 2019 (254.202) and September 2019 (256.759) (courtesy of inflationdata.com), we can calculate the variable rate for the second 6 month period for October 2019 issue I Bonds.

That means these bonds would earn the current rate of 1.90% (using 0.5% fixed & 0.70% variable) for the first 6 months and 2.53% (combined 0.5% fixed & 1.01% variable) for the second 6 months. IMO, the current 1.90% rate doesn't really make an October purchase terribly appealing unless you believe that the 0.5% fixed portion (the highest in a decade) will go down next month. At this point, I don't think an I Bond purchase is compelling when compared to something like the 11 month CD @ 2.50% APY special currently being offered at Wheelhouse Credit Union.

Having already maxed out my 2019 purchase limit in January (as I did each of the previous two years), I can't act on these anyway. As always, I will continue to evaluate them and see what makes sense for me next year.

Friday, October 11, 2019

October 2019 Financial Asset Roundup

Here are my current financial assets as of the market close on October 10th, 2019:

Asset Sep
Checking 683 2,539 1,856
Money Market 41,550 52,937 11,387
Savings Bonds 160,523 160,815 292
Treasury Bills 0 0 0
CDs 89,167 79,135 -10,032
Brokerage 184,681 184,312 -369
401k 203,804 204,955 1,151
Roth IRA 166,638 165,092 -1,546
SEP IRA 819,649 809,686 -9,963
529 Savings 184,347 184,891 544

Total Assets $1,851,042 $1,844,362 -$6,680

The market has dropped a bit since the last update, with the S&P 500 falling 1.38% during that time:

(chart courtesy of nasdaq.com)

On the jobs front, the unemployment rate for September fell to 3.5% (the lowest since 1969), with 136,000 new jobs created. Oil prices dropped a bit to the $54 level, with a local unleaded regular gasoline price of $2.39 per gallon at my last fill up. Unfortunately, any good news on the economy is overshadowed by the impeachment inquiry launched against President Trump.

On the financial front, my only move of note was taking a distribution from my S Corp. The September 2019 Consumer Price Index (CPI-U) numbers were also released this week, so I'll have to find some time to talk about the implications for I Bond purchases.

As for the rest, I'll have two college students in the house next year and have been up to my eyeballs in FAFSA and CSS Profile financial aid forms. Yay scholarships!