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Series I Savings Bonds vs the Stock Market

Wednesday, March 24, 2010 - 7:39 AM
It's generally believed that a well diversified stock portfolio will give you the best performance over the long term. It has been over 11 years since Series I Savings Bonds were first offered, and they're still beating the performance of the Vanguard S&P 500 index fund according to this graph at Savings Bond Advisor. The comparison is based on equal monthly investments since September 1998 when the I Bond program began.

It should be noted that I Bonds are not nearly as attractive as they used to be before 2002. Also, as the Savings Bond article states
no matter what this graph says, don't buy Savings Bonds expecting to outperform stocks. [...] They [I Bonds] make a great foundational choice for the low-risk portion of your investment portfolio.
1
Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
Rep Points: 125,708
1. Wednesday, March 24, 2010 - 11:34 AM
I've been trying to find an answer as to why some of the I Bonds I bought is 2001 are earning 0%  That's  according to the savings bond calulator at their site.

I thought the least they would earn was their fixed rate.
1
AnonymousAnonymous2,282 posts since
May 9, 2010
Rep Points: 3,961
2. Wednesday, March 24, 2010 - 3:39 PM
I don't know what dates you are referring to, May 1st 2009 - Oct 31st 2009 the I bond had a fixed rate of 0%, you would only make money if the inflation rate went up.
1
AnonymousAnonymous2,282 posts since
May 9, 2010
Rep Points: 3,961
3. Wednesday, March 24, 2010 - 5:20 PM
I was under the impression that the fixed base rate was constant regardless of interest rate swings?  The fixed base rate was stated when you bought the bonds.  The inflation component was the only portion that actually changed every six months.
1
AnonymousAnonymous2,282 posts since
May 9, 2010
Rep Points: 3,961
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