kim0201 -- I've been hoping someone with more insight would respond to your post. First, I must commend you for your disciplined investment strategy. The most important thing is to save regularly, and you've been doing that and investing safely -- you are very wise. I purchased some I-bonds in October 2001. I've been very pleased with the return, but the fixed rate was 3%. Rates had dropped dramatically from May 2001 to October 2001, so I had the advantage of knowing that the fixed rate would likely not see those levels again for quite some time. Because the fixed rate is only adjusted semi-annually, you can lock in the rate that was in effect six months prior -- an advantage if rates have fallen. The inflationary rate has been disappointing at times. They use core inflation, so food and energy aren't calculated into the equation. When I've gone in to check the new inflationary rate, I've been surprised that it wasn't higher. My inclination is to not invest in I-bonds now because the fixed part of the rate is low. I believe rates will go up (not immediately, but within the 5 year holding period) and while I believe that inflation will rise, too, the fixed rate portion can really hold back your return. Having said all of that, your strategy of dollar cost averaging is much more effective than trying to time the market like I'm doing. However, I don't invest regularly in Bonds -- just sometimes when the circumstances are appealing. I hope someone else here will provide you with more useful information. Keep up the good work!

I only got to read about half the posts, but I did just want to add one thing about spending too much around the holidays... We have a 3.5 year old daughter and a 1.5 year old son. A few weeks before Christmas, my DD sat on Santa's lap and told him that she wanted "the pony on TV that you can sit on and feed carrots." We finally figured out what she meant--she must have seen a commercial for "Butterscotch the Pony"--this pretty big stuffed horse that's advertised all over the place. We're suckers for our firstborn little girl (and just proud that she actually sat on Santa's lap and talked to him...not so last year!), so we look up Butterscotch the Pony...$300!! For a stuffed horse! NO WAY!! You could get a real pony for $300! I went into school the next day and told a colleague in my department about this ridiculous cost of a big stuffed pony (and the fact that it SOLD OUT at most places!). She just stared at me. She said that that's nothing...she usually spends over $1500 on EACH CHILD at Christmas--and her boys are 5 and 3. What could they possibly need or want to add up to 3K?? Needless to say, Butterscotch did not make an appearance under our tree...but we did get a bunch of other toys and fun things for our kids...and you know what my DD loved the most? An Ariel pillow that her Uncle gave her and a $10 Cinderella dress that Grandma got her. No mention of the missing pony (we did get her a neat pony/horse & rider set, which made us feel better...$17...not $300!) Sometimes Christmas can be really overwhelming, we definitely do lose sight of the real reason for the holiday, and it's sometimes better with less!!! :) Sarah

Hi Rita, and others. I receive a (non-contributory - with years-of-residence requirement) government pension - on which I pay income tax, fed. & prov. I also earned my right to receive a government pension through (deductible at the time) contributions made by my employers and me. I pay tax on that, as well. I receive a privately funded pension, to which my employers and I both contributed, which was then a deductible amount for me. Which annual payment amount is added to my taxable income. I had a retirement fund, to which I alone made deductible contributions, plus a later addition from a credit earned with a part-time employment situation, part of which I could roll into that retirement fund, and part of which I had to take out in cash - thus incur tax liability in that year. When I was 69 (earlier it was 71) I had to close my personal contributory retirement fund, and I had choices: one was to shift all or part of the retirement fund into an annuity - more about that option, which I don't like, below. Or I could roll all or part of it into a retirement income fund into which I could no longer make contributions, and from which I was required to make withdrawals for the rest of my life, initially at about 7.5% annual rate and in increasing percentages until at 20% annual rate at and after age 90. I could withdraw larger amounts if and whenever I chose. I had a choice among a fairly broad range of investment types into which I could invest that asset. If I had a spouse, at my death the total mount remaining could be transferred to a similar account in her name. If I lacked a spouse (or minor or disabled kids), the full amount remaining becomes income in the year of my death - probably taxed at a higher rate than I saved when contributing it. But ... I'm no longer around to need a pension, so ... Had I not chosen one of those two available systems, the income tax people would have said that my retirement fund was shut down at the end of the year in which I was 69 - and the full amount became income in that year. And taxed accordingly. I have a prejudice against insurance companies - if they were as concerned about the public/their clients as they claimed, how come they pushed (expensive) whole life insurance so much, for so long, saying how wonderful it was that it built up those great cash values, etc.? Trouble is - if you took the cash value, the death benefit evaporated. If you waited for the death benefit, to support your dependents ... ... the cash value disappeared. The insurance companies bet that you're going to live. You bet that you're going to die (prematurely - while you have others depending on your income for survival). They're the ones who employ the actuaries. And the sales people - who are, let's say, fairly well paid (or they don't get to stay around). Annuities are a situation where you give a manager a pot of money ... ... in exchange for a promise that they'll pay you a given amount of money, annually, until you die. Or for a guaranteed number of years, maybe including spouse, etc. - in each of which case, the amount that they're willing to pay annually shrinks. Of course. Some insurance companies have gone broke - which meant that the people who held their annuities were left holding a worthless piece of paper. Later some insurance companies went together to provide a partial remedy for such situations. Annuities may not have been a bad idea about 25 years ago, when interest rates were high (but inflation was high, then, also) but not now when interest rates have been low for a number of years. Many of us feel that, as the U.S. gov't. has such huge debt, an increasing amount of it in recent years held by foreigners, plus running a very large deficit annually, making the debt increase even more, plus are printing money ... ... that the high respect in which the U.S. Dollar has been held for generations isn't going to last much longer. Which means that, in order to entice would-be lenders to be willing to lend more to the U.S. government, they'll have to offer higher rates of interest. Consumer debt in the U.S. is huge, as well - and rising. They're buying much more from abroad, especially China, than they're selling. Which puts the U.S. Dollar in serious - and increasing - jeopardy. Not a good time to be agreeing to an annuity contract, in my opinion. Not only that. Not only that. I don't want someone else running my money - I want to run it myself. Those who do it well ... ... retire early. Have a great weekend, everyone. ole joyful

Hi you guys who are putting your spare change, plus adding a bit, or whatever, into a piggy bank, a big jug, a serving dish, bedside table or some other receptacle ... ... that's the same as putting it under the mattress. Can't grow (each dollar, coin, etc., that is) by even a smidgeon. If you put it into a savings account, it earns at least a little - even though it's even less after income tax. But - when you put it into a bottle, jug, under the mattress, or wherever ... ... are you aware that part of the money that you put in evaporates, flies away, is stolen by the Grinch, or whatever? In any case - as far as you're concerned, it disappears. You tell me that I'm crazy - that you put in $2.00 once, $1.00 later, and $5.00 still later. That each dollar that you put in is still there (unless you have larcenous kids, visiting friends, whatever). Yes - each dollar that you put in is still there. But ... ... remember how much $10,000. would buy, 10 years ago? Will $10,000. buy the same amount now? As you know, it will not. Inflation erodes the value of every dollar that we own as a dollar, every year. If we own it as a house, its value may increase. If as a table, its value will decrease, especially just after we buy it - though if we wait long enough and it becomes an antique, it may be worth quite a bit. Even then, will it be greater value (even if the dollar amount is higher) than when we bought it? If we own it as a car - well, if you buy a new car, be sure to leave the window down with a few hundred dollars lying on the passenger seat to fly out the window, so to speak, as you drive home, for its value will have decreased by a couple of thousand, at least, during that drive. There are two rats that eat our cheese - the income tax people want to talk to us about every dollar of our annual income, annually. And they want part of it. If we invest in systems where the amount of the basic asset can't shrink, in almost every case, it can't grow, either. So - we must take part of the annual earnings to add to the basic asset itself, so that after ten years that $10,000. won't have lost some of its purchasing power. Hope you all have had a great week - and that the U.S.ers had a fine Thanksgiving. ole joyful