US Savings Bonds – Actually a Good Investment Option

I will admit I have only recently looked at US Savings Bonds as an investment option. It seems to me series I savings bonds are the better option. Series I bonds are based on the inflation rate and given how strongly the Fed has been surpassing interest rates (which is likely to increase for the next few months) this offers an option to get a higher rate of interest.

Rates for EE bonds depend on the issue date and are either a fixed rate of return or a variable rate based on 90% of 6-month averages of 5-year Treasury Securities yields.
The annual interest rate for EE Bonds issued from November 1, 2019 through April 30, 2020, is 0.10%. At that rate these certainly don’t seem worth bothering with to me.

The earnings rate for series I combines two separate rates:

  • A fixed rate of return, which remains the same throughout the life of the I bond.
  • A variable semiannual inflation rate based on changes in the Consumer Price Index for all Urban Consumers (CPI-U). The Bureau of the Fiscal Service announces the rates each May and November. The semiannual inflation rate announced in May is the change between the CPI-U figures from the preceding September and March; the inflation rate announced in November is the change between the CPI-U figures from the preceding March and September.

image of series ii USA savings bond with Chief Joseph

The composite rate for I bonds issued from November 1, 2019 through April 30, 2020, is 2.22% (pretty good rate, you can see why I say they are a good option). This rate applies for the first six months you own the bond. The rate will then be recalculated using the CPI-U rate.

Composite rate = [fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]

2.22% = [0.0020 + (2 x 0.0101) + (0.0020 x 0.0101)]

This is calculated based on a fixed rate of .2% (showing how depressed interest rates are) and 1.01% inflation rate for a 6 month period (which also is low but compared to interest rates pretty high).

You may buy series I US savings bonds online via TreasuryDirect. In a calendar year, you can acquire up to $10,000 in electronic I bonds. Somewhat bizarrely the USA government decides you can purchase an additional $5,000 in the paper I bonds each year (but you cannot purchase $15,000 of the electronic I bonds).

You can redeem series I bonds after 12 months. However, if you redeem the bond before it is five years old, you lose the last three months of interest.

US savings bond interest is also exempt from state and local income taxes. This likely isn’t a big deal for most people but for a few states with high tax rates on high income tax holders this may be a nice additional benefit.

Given the very limited options to earn interest income today series I bonds are a reasonable alternative for the income portion of a person’s portfolio.

You may also use the Treasury Direct website to buy US Treasury bills, US Treasury notes and US Treasury bonds.

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Cheap Internet Data Options for Travelers and Nomads in the USA

The video from the excellent CheapRVliving YouTube channel provides excellent information on getting internet coverage while you travel the USA. USA internet coverage is often very expensive, but this provides some good sources for those looking to have coverage but avoid paying the highest prices.

[The video was removed from YouTube]

Some of the suggestions from the video:

  • Verizon unlimited 3g mobile hotspot – (sure it is a slower but he streams Netflix, YouTube, Amazon Prime etc. without problems even using a Amazon Fire stick for his TV). Link is to device on ebay using his recommended seller glselectronics). Cost for the Flashed Novatel MIFI 4510L is $60 and the data is $5/month.
  • T-mobile via 4gantennashop. In the video he says he pays $18 a month (I don’t see that offer on the website but…). He says it is 5Gb plan but with BingeOn and Music Freedom (so Netflix, YouTube, etc. are not counted against your data use). He mentions that the network is congested sometimes.
  • Sprint via 4gcommunity. I have read plenty of great reviews on this and also hassles about getting signed up. You must buy a device from them (so it costs a total of $250 for the first year) and then pay annually for membership ($168 a year).
  • Another Sprint Network option using the same bandwidth (it is part of a deal struck with the government when Sprint bought Clearwire) is Calyx ($500 which gets you a hotspot also, and $400 in future years). Both Sprint options provide 4G coverage where available (in general Sprint’s network is good in very populated areas but not good elsewhere). Both are effectively unlimited as they have no cap and no speed reduction (though pushing it too far may result in issues from Sprint and if too many did so may result in issues for the entire program – essentially Sprint using abuses to get the government to rescind the agreement that provides us this affordable option).
  • AT&T via FreedomPop (he suggests buying via slickdeals). This can be as cheap as $1 for a sim card and then you can take various measures to get 1Gb free every month for each sim card. So you can buy multiple sim cards to have more coverage. This is the cheapest option but there are plenty of people that complain about having to deal with Freedom Pop. It can be a decent free option but realize you may have to spend time dealing with hassles of using this service. However using it as a backup to have a AT&T signal could be useful (I don’t think I would bother with multiple sim cards – you have to track your usage switch sims…). You can’t use your phone as a hotspot for free (you can pay to add that option).

He pays about $35 for his combination of plans using the networks of T-mobile, Verizon, AT&T, Sprint.

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