Picking up Nickels

Friday, October 22, 2021

September 2021 CPI-U numbers released: Buy I Bonds Now!

The U.S. Bureau of Labor Statistics released the September 2021 Consumer Price Index (CPI-U) inflation data last week, which increased by 0.272% 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 2021 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 2021 (264.877) and September 2021 (274.310) (courtesy of inflationdata.com), we can calculate the variable rate for the second 6 month period for October 2021 issue I Bonds.

That means these bonds would earn the current rate of 3.54% (using 0% fixed & 1.77% variable) for the first 6 months and 7.12% (combined 0% fixed & 3.56% variable) for the second 6 months. In the current interest rate environment, an October I Bond purchase is VERY attractive when compared to something like the 12 month CD @ 0.80% APY special currently being offered at Lafayette Federal Credit Union. And, of course, waiting until November to buy will basically double your initial rate with the 7.12% offering.

With such market-beating rates, I really wouldn't discourage anyone from purchasing I Bonds in October or November. For what it's worth, I would buy in October to lock in the great 3.54% rate for the first six months before grabbing 7.12% for the second six months.

Wednesday, October 13, 2021

October 2021 Financial Asset Roundup

Here are my current financial assets as of the market close on October 12th, 2021:

Asset Sep 2021 Oct 2021 Change

Checking 3,562 2,507 -1,055
Money Market 130,618 131,656 1,038
Savings Bonds 191,756 192,162 406
Treasury Bills 0 0 0
CDs 31,887 31,977 90
Brokerage 286,758 294,669 7,911
401k 410,343 401,936 -8,407
Roth IRA 252,951 246,470 -6,481
SEP IRA 1,170,929 1,152,133 -18,796
529 Savings 182,619 180,739 -1,880
Total Assets $2,661,423 $2,634,249 -$27,174

The S&P 500 pulled back a bit, falling 2.42% (+15.83% YTD) since the last update:

(chart courtesy of nasdaq.com)

On the jobs front, the unemployment rate for September fell to 4.8%, with a disappointing 194,000 jobs added. Oil prices rose to the $80 level, which translates to a local regular unleaded gasoline price of $3.09 at my last fill-up.

On the financial front, it was more "slow & steady": 401k transactions, a monthly Vanguard VTI brokerage purchase, and a pending distribution from my S Corp.

Once again, my monthly update is happening on the same day that the September 2021 CPI-U numbers came out. Stay tuned for a follow-up on of the impact for Series I savings bonds.