Picking up Nickels

Friday, October 14, 2022

September 2022 CPI-U numbers released: Buy I Bonds Now!

The U.S. Bureau of Labor Statistics released the September 2022 Consumer Price Index (CPI-U) inflation data last week, which increased by 0.215% 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 2022 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 2022 (287.504) and September 2022 (296.808) (courtesy of inflationdata.com), we can calculate the variable rate for the second 6 month period for October 2022 issue I Bonds.

That means these bonds would earn the current rate of 9.62% (using 0% fixed & 4.81% variable) for the first 6 months and 6.48% (combined 0% fixed & 3.24% 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 @ 3.85% APY deal currently being offered at Banesco USA.

In my opinion, I would buy in October to lock in the outstanding 9.62% rate (the highest ever!) for the first six months along with the 6.48% for the second six months. I would also consider following that up with another purchase in April 2023 once the March 2023 CPI-U numbers are released.

Wednesday, October 12, 2022

October 2022 Financial Asset Roundup

Here are my current financial assets as of the market close on October 11th, 2022:

Asset Sep 2022 Oct 2022 Change

Checking 3,436 6,190 2,754
Money Market 97,754 97,204 -550
Savings Bonds 214,404 215,855 1,451
Treasury Bills 30,000 30,000 0
CDs 43,074 43,176 102
Brokerage 263,560 220,460 -43,100
401k 397,325 352,056 -45,269
Roth IRA 227,686 202,468 -25,218
SEP IRA 1,050,279 949,131 -101,148
529 Savings 163,844 157,267 -6,577
Total Assets $2,491,362 $2,273,807 -$217,555

The S&P 500 is near 52-week lows, falling 12.69% (-24.70% YTD) since the last update:

(chart courtesy of nasdaq.com)

On the jobs front, the unemployment rate for September fell back to 3.5% (a 50 year low), with 263,000 new jobs added. Oil prices have remained somewhat steady at the $89 level, with recent OPEC production cuts not a good sign for future price decreases. That translates to a local regular unleaded gasoline price of $3.39 at my last fill-up.

On the financial front, I did the usual 401k transaction and Vanguard VTI purchase in my brokerage account. I also put $15k into 13 week T-Bills with an investment rate of 3.415% (up from 3.029% a month ago) and will probably add to that number in early November. To cap things off, I took a distribution from my S Corp and finally completed a years-long dream of joining Navy Federal Credit Union since a family member recently became eligible to join.

Tomorrow the September 2022 CPI-U are scheduled to be released, so a follow-up post of the impact on Series I savings bonds will be coming.