Wall Street Journal Article “Why Stocks Are Riskier Than You Think” Features iBonds and An Error

The Wall Street Journal today had an article titled “Why Stocks are Riskier Than You Think“. The article discussed a strategy using iBonds & TIPS as a partial alternative to stocks along with the use of options to limit risks of a large downswing in your stock portfolio value.

While I am not here to recommend a particular investment strategy I do discuss iBonds and they have a little infographic called “Creating a Safety Net” with iBonds and TIPS and it describes the key features of each. Here is a link to the infographic. They talk about how the bonds move with inflation, interest, maturity, fees, taxes, and price fluctuations.

But on the key measure of “purchase limits”, which has fluctuated over the years from as high as $30,000 per SSN (with the option to also buy equivalent “paper” iBonds which are no longer offered) to as low as $5000, the article says that the limit is now:

Each Social Security number is entitled to a maximum of $5000 a year in electronic bonds.

However – this is incorrect. If you go to the site http://www.treasurydirect.gov, which is now the only place where you can purchase iBonds (you can no longer buy paper ones at banks) – here is what the US Government web site says:

Buying I Bonds through TreasuryDirect:

Sold at face value; you pay $50 for a $50 bond.
Purchased in amounts of $25 or more, to the penny.
$10,000 maximum purchase in one calendar year.
Issued electronically to your designated account.

This price limit changed a few months ago and whomever wrote this article didn’t bother to check this basic fact. That is unfortunate.

In looking at as many of the comments as I could (they are filled mostly with rants and one-sided arguments) no one there knew about this limit either. So Wall Street Journal – could you please fix your infographic? It supports your argument (by allowing for larger purchases) and that little infographic is pretty good other than this key error.

Advertisements

One thought on “Wall Street Journal Article “Why Stocks Are Riskier Than You Think” Features iBonds and An Error”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s