There are probably better ways to use $10,000 if that is all you have and you are interested in growing money - online courses come to mind.
But the reality is that 10% on 10k isn't a terribly large amount of money at the end of the day.
Maybe the stock market makes a huge come back but a lot of things are pointing against that happening in the next year. The Fed & inflation, baby boomer retirements causing stocks to get sold & less risk assets bought, that whole Europe thing going on.
Seems silly to me not to use I-bonds even if the cap is relatively low, sure wish I could (not American).
The rest I invest in equities, which assuming the US has a functioning society in 5, 10, or 20+ years, will be worth far more.
First, this is ridiculous. It was pretty easy to set up. Yeah, the virtual keyboard is weird and there's some waiting with the verification, but it's trivial effort.
"I also want my cash to be accessible within a few days"
Now we're comparing apples to oranges. If you need the cash in a few days (kind of odd/rare to begin with), then you want a saving account not an investment. That said, withdrawing your I bond capital does not take months or years (withdraw anytime with only a loss in interest if less than a year).
"The rest I invest in equities, which assuming the US has a functioning society in 5, 10, or 20+ years, will be worth far more."
Depends on the equities and your definition of a functioning society. It's more likely to be flat, at least in real terms, over the next decade.
I am under the assumption that the US’s leaders have every incentive to keep broad market equity values going up, even if it means the USD loses purchasing power. There are a ton of leaders with equity ownership that want to see it go up, as well as political support from constituents with IRA/401k/etc, as well as the innumerable underfunded defined benefit pension plans across the country that rely on broad market equity values to keep rising to meet their projected expenses.
For that reason, I consider an SP500 ETF like VOO or even VTI to be relatively safe and track inflation over the long term.
Only a raging bull market like the one we've gotten out of makes a 10% government backed rate of return sound bad.
My philosophy is I keep a certain amount of physical cash (in case electronic payments go down), I keep digital cash (in case my income gets disrupted), and the rest is invested. I already have the digital cash in an FDIC insured savings account earning 2.4%, and I do not need to worry about splitting it up into per year amounts or when I can and cannot withdraw it and how much.
It is more of a simplicity thing I guess for me, and the abnormal inflation calculations which lead to the last 18 months of exceptional i bond returns probably will not last.
So you're looking at getting $600 - $800 to tie up $10,000 for a year, and you have to go through hoops and a cumbersome website to do it.
It's a better deal than other fixed income investments right now, but with an after-tax return that's guaranteed to be worse than inflation, it's hard to get excited about it.
What is nice about a position of that size is that that amount is in the ballpark of a typical families expenditures in a year (ignoring the occasional big ticket items like a car), which means you have essentially hedged away your exposure to inflation.
So yeah, $10k is not a lot, but that is an annual limit, not a lifetime limit. And a good way to hedge inflation is to build an I-Bond allocation that is equivalent to your annual expenses which for most households should only take a few years to get to. And an added bonus is that selling your I-Bonds early has fairly minimal penalties and can be sold at face value (i.e. not subject to market swings) so your I-Bond allocation can double as an emergency fund.
You can still get them if you get them as part of your tax return. Overpay estimated tax or increase your withholding.
10. Will I get actual paper bond certificates? Yes. Savings bonds purchased with a tax refund will be issued as paper bond certificates in your name. If you are married and filed a joint return, the savings bonds will be issued in your name and your spouse's name. If you purchase savings bonds for someone else, the bonds will be issued in the name(s) that you listed on Form 8888.
https://thefinancebuff.com/overpay-taxes-buy-i-bonds-better-...
>The $5,000 maximum is per tax return, not per person. If you’re married filing jointly, you still can buy only a maximum of $5,000 for both of you combined, not $5,000 for each of you.
True in the normal case, when inflation changes slowly, but because the I-Bond rate is computed retroactively, it's a better deal than normal when inflation suddenly increases.
Merely?
What are some other ways to keep up with inflation with near zero risk?