Still think TITNC3: Return of the Iceberg was peak

they're good to lock up a kids savings thoug, lock it up for 18 years and then use it to pay for college. tax free withdrawals if used on higher education

 

most people have their money sitting in a saving account gaining .50% ....with ibonds they'll be gaining 9% starting next month

 

something something bootstraps!

 

Sure, if a 15k (max) hedge is going to mean much, at which point you don't stand to lose much from a few down years anyway, so ¯\_(ツ)_/¯

An excellent hedge to a down market? Don't sell. An even better hedge? Buy in any time it's down 10% or more from ATH.

If you're wanting to reduce volatility in your portfolio, bonds, bond funds, cash, gold, inverse products all exist.

If you could drop a couple hundred K in these things then they'd be useful as a portfolio tool. As it stands, sure, they'll keep your savings even for a year if you don't need it but that's about it.

 

The reason there's no reasonable savings avenues that pay decent interest rates like in the days of yore is a direct result of banks and hedge funds forcing retail to put their money into the stock market so they can manipulate it and milk it for 60 years until you die

 

Use a 529 plan for that:
https://www.fidelity.com/529-plans/what-is-a-529-plan

And you'd see a way higher return on that money in something stupid conservative like a 50/30/20 split between Total US Stocks, Bonds, and Cash.

Fixed this for you.

It's better than cash sitting in a savings account if liquidity doesn't matter...but with cash in a savings account, liquidity is about the only thing that should matter. The idea is emergency liquidity, after all.

The best emergency savings right now is honestly probably a low interest line of credit.

 

Now you are assuming only people with a lot of money matter. If you don’t have a lot to invest, maybe you want to be a little more cautious and I bonds might be the ticket. Not everyone can throw 10k in the market and feel confident they can survive a 2 year down market. Just because it’s 10% below ATH doesn’t mean it won’t still be down in 2 years. Not everyone has high financial security. A 9% return with all the uncertainty in the world is a good choice for some people.

 

No reasonable takes allowed. Be gone wench.

 

true true, i actually looked into a 529 for our baby a few months ago and forgot to actually do one yet

 

GME to the moon

 

No, I am talking raw math. What percentage of a portfolio does a hedge have to be to matter? 10%? 20%?

Say it's 10% and we're talking a 150k portfolio.

Say the market goes on a 30% drop over two years, for giggles. That's 45k off the top. Now you're at 105k. Those 15k in I-bonds delivering 9.5% over two years paid you...2,850 over that period. Say you loaded up both years, you got a theoretical 5700. Less taxes. And if you liquidated the bonds, a 3 month interest penalty.

Does that make up for a 45k drawdown? It turns your 30% portfolio downturn into roughly a 27% downturn after taxes/penalties.

And if you stack up 15k of these things every year as the majority position in your portfolio, sure, you won't have much of a drawdown...but no meaningful growth either.

This is exactly why asset allocation needs to be determined by time horizon and goals. Broke 22 y/o college graduates don't have a lot to invest. They should also being staying way the fuck away from I bonds because they desire optimized growth and have 40+ working years to obtain it.

If people are investing money they cannot afford to do without for at least 5 years, then they need personal finance classes, not different investment products.

 

fight fight fight!!!

 

And going the other direction:

Say you hedge with these 50%, meaning you have a 30k portfolio. Market drops 30%, drawing value down 9,000.

That's the other end of the math - if you're heavily hedged in these, unless you've been doing it for decades, your portfolio size is going to fund your life for less than a year and fallout from errors will be similarly muted mathematically. You can ameliorate mistakes at lower dollar values without sacrificing a lot of time, and that is key.

 

I don’t care. He just likes to say everyone is an idiot. I already know for a fact everyone is an idiot. But I don’t want to tell them.

 

No, I like to read myself type. There's a difference!


(Seriously though, do you not think this type of exchange is valuable for whoever might be watching? Education! Your position is valid, I just disagree with it.)

 

I am pleased for once to be a casual observer of the dialogue rather than being deeply entrenched within it while espousing my undying rhetoric that I, and only I, have the correct opinion.

 

dang, would be cool if they did it because of Elon

 

It’s also becoming clear these bonds could be beneficial as a safe haven for my degenerate gambling “investments”
Plenty of idiots could make money by not losing it on meme stocks. I’m taking my mattress money and investing in these super cool I-bonds. Or GME, can’t decide

Of course conversation is good. I just can’t keep it going for very long because I care so little about almost everything