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Comment by paxys | Hacker News Reader

I must be the only one who hasn't caught the I-bonds mania. Yes 9.5% is a crazy interest rate, but it only works if you (1) have $10K lying around in a savings account (2) don't need to touch it in the next 12 months (3) need it in the short term after the 12 months are up. And ultimately you will make a few hundred dollars worth of interest (minus a 3 month interest penalty), all of which will be taxable immediately at your regular short-term rate.

Just put the $10K in VOO instead and forget about it for a few years.

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I'm okay with 1, 2, 3. This is far better than anything offered by Canadian fixed income products. The reason I'm wary of equities, especially indexes is that its severely overvalued and due for a major correction (30~50% seems to be the consensus by famous bears), and that it feels like its running on fumes post 2020.

So $900 USD * 0.75 = $675 USD risk rate return after 50% capital gains tax ain't that bad. Wish wise I might be able to get back $840 CAD on a ~$12000 CAD investment.

Would be great if I could get the extra 5k limit increase by going the paper option like somebody mentioned in the comments but unsure how that plays out for Canadians.

> its severely overvalued and due for a major correction (30~50% seems to be the consensus by famous bears)

Then why not short it?

You could but you could also hold inverse SPY tickers can't you?

I understand the risks of shorting but its not clear to me say what I stand to lose with $SPXU for instance, is it designed to lose value with time due to the underlying futures contracts?

The bears always think prices are too high and we are due for a 30-50% correction. It hasn't worked out well to listen to them.

It can be used as an emergency fund (takes some time to build up but if you do the math it’s totally worth it to take 10k you would have invested, put it in i bonds, then invest 10k from your cash savings after a year, even assuming inflation goes back down to 1-2% and stocks perform really well) or as part of a portfolio with both stocks and bonds.

I haven't done the research on I Bonds, but interest on T-Bills is not subject to state tax.

I-bonds are subject to regular federal income tax.

Yes, but I only mentioned state tax. Are I Bonds subject to state income tax? The lack of state tax on T-bills was a great loophole for emergency fund growth a few years ago until yields dropped around the start of COVID.

No idea, but my state doesn't have income tax regardless. And for any regular investment tax is 0 until you realize it.

> Are I Bonds subject to state income tax?

No.

https://www.treasurydirect.gov/indiv/research/indepth/ibonds...

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