I wanted input on something I have been thinking about

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  • #80583 Reply

      We are in the accumulation phase and would like to know what would you recommend ibonds vs investing in VTSAX.

      We are maxing our contributions to 401k, don’t qualify for Roth and we don’t want to put this in savings account.

      Thanks in advance.

      #80584 Reply

        When rates drop back down to essentially 0% for ibonds, what would you do with those funds? If you would invest it, just invest those funds now in a taxable brokerage account.

        #80585 Reply

          Stock index funds are designed for people who want to make money as they historically beat inflation by about 6 percentage points. iBonds are for people whose only goal is to not lose money to inflation.

          #80586 Reply

            So you are putting $22.5k in your 401k? And in your spouses 401k? Congratulations!

            You should be able to make NON-DEDUCTIBLE contributions to your Trad IRA and then immediately roll them over to a Roth IRA.

            Also, an I-bond has good rates right now (6.8%) but in a year, they will return to far more reasonable rates. And you are limited to $10k/yr. Plus your spouse can put in $10k. Plus your busn. plus any trust you may have. Finally, you can send $5k of your tax return to buy I-bonds.

            Alternatively, you can buy fed treasury bonds with rates around 4.5%. The interest is free of state and local taxes.

            Finally, you can put your money in your brokerage’s money mkt accounts. Fidelity is paying 4.5%.

            #80587 Reply

              It doesn’t have to be either/or. Some people are comfortable at 100% stocks, others at 70/30 stocks bonds or some other mix. If you pick a mix it can be rebalanced each year.

              #80588 Reply

                Way too many unknown variables here to give you an objective answer, but typically you can afford to take on additional risk during the accumulation phase. Ibonds for all intents and purposes are risk less but the reward is equivalent. The markets are depressed, now’s the time to be aggressive.

                #80589 Reply

                  I bonds aren’t for growth. It’s for capital preservation of cash. It allows you to have stash of inflation protected cash. Theyre fine as long as u understand that. They aren’t a long term investment for growth in the accumulation phase. If thats ur goal just go VTSAX. Personally. I put about half my EF in I Bonds. Then at least my EF doesn’t lose to inflation

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