Treasury Direct?

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Topic Author
rockstar
Posts: 6308
Joined: Mon Feb 03, 2020 5:51 pm

Treasury Direct?

Post by rockstar »

I'm thinking of buying $10k in I Bonds. I have a $10k buffer in my emergency fund that I built up for COVID that I feel comfortable locking up for one year in an I Bond now that we're coming out of the pandemic. It's in my checking earning nothing along with the rest of my emergency fund. I understand that I'll lose 3 months of interest if redeem in less than 5 years. And I understand that my money is locked up for 1 year.

Are there any downsides to using Treasury Direct to buy them? I'm thinking of setting up an account this weekend, so I'd like folks input into their experience with Treasury Direct. How long does it take to link your checking account to their site? How long does it take to redeem and transfer money? Any downsides to using them for the purchase? Any limits on money transfers to their site? How long do these take?

Thanks.
TarHeel2002
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Joined: Sun Jun 17, 2012 2:14 pm

Re: Treasury Direct?

Post by TarHeel2002 »

I just bought 20k of I Bonds (for me and my wife) back in May for the exact same reasons you are mentioning. I couldn’t stand my Emergency fund earning next to nothing in my savings account. I still have a decent chunk of cash that I can access currently; but I plan on buying more I Bonds in 2022 with some of this cash as my one year hold period will expire for my 2021 up purchase. It was pretty easy to set up an account and didn’t take long at all. The money transfer went pretty quick too. If I remember correctly, the funds were withdrawn the next business day after I submitted the purchase. The Treasury Direct website isn’t the prettiest website but it does get the job done.
Topic Author
rockstar
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Re: Treasury Direct?

Post by rockstar »

TarHeel2002 wrote: Fri Jun 11, 2021 9:29 pm I just bought 20k of I Bonds (for me and my wife) back in May for the exact same reasons you are mentioning. I couldn’t stand my Emergency fund earning next to nothing in my savings account. I still have a decent chunk of cash that I can access currently; but I plan on buying more I Bonds in 2022 with some of this cash as my one year hold period will expire for my 2021 up purchase. It was pretty easy to set up an account and didn’t take long at all. The money transfer went pretty quick too. If I remember correctly, the funds were withdrawn the next business day after I submitted the purchase. The Treasury Direct website isn’t the prettiest website but it does get the job done.
After transferring $10k, I'll still have an adequate emergency fund in my checking. I'm good maxing out around $30k in I Bonds over three years. I can't see having more than that with these low returns.

Have you ever redeemed one? How does that process work?
bhough
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Joined: Wed Feb 15, 2017 5:53 pm

Re: Treasury Direct?

Post by bhough »

Buying is easy. Redeeming is easy. There are transaction costs. There is no bid-ask spread. It is a no-brainer. Please note that if you sell it in 12 months, you'll only get 9 months of interest. I think you'll like it and keep using it.
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odessit
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Re: Treasury Direct?

Post by odessit »

Hi, You mention it will be a transition cost for redeem bonds? How much? What about tax for interest? Thanks in advance.
lakpr
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Re: Treasury Direct?

Post by lakpr »

odessit wrote: Fri Jun 11, 2021 10:08 pm Hi, You mention it will be a transition cost for redeem bonds? How much? What about tax for interest? Thanks in advance.
I think he meant no transaction costs, missed the "no".

The tax on interest can be deferred until the year you actually redeem the bond, or 30 years, whichever occurs first.
Last edited by lakpr on Fri Jun 11, 2021 10:21 pm, edited 1 time in total.
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anon_investor
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Re: Treasury Direct?

Post by anon_investor »

rockstar wrote: Fri Jun 11, 2021 9:18 pm I'm thinking of buying $10k in I Bonds. I have a $10k buffer in my emergency fund that I built up for COVID that I feel comfortable locking up for one year in an I Bond now that we're coming out of the pandemic. It's in my checking earning nothing along with the rest of my emergency fund. I understand that I'll lose 3 months of interest if redeem in less than 5 years. And I understand that my money is locked up for 1 year.

Are there any downsides to using Treasury Direct to buy them? I'm thinking of setting up an account this weekend, so I'd like folks input into their experience with Treasury Direct. How long does it take to link your checking account to their site? How long does it take to redeem and transfer money? Any downsides to using them for the purchase? Any limits on money transfers to their site? How long do these take?

Thanks.
Some people report having to mail in a form with a signature guarantee to open up/unlock their account. My spouse and I never had this issue. We have been buying I Bonds since last year. Our accounts each got locked once, but we were both able to unlock over the phone.
ChiKid24
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Re: Treasury Direct?

Post by ChiKid24 »

I had no issue setting up an account. Did one for myself and one for our trust with intention of funding in May. About two weeks after creating the accounts I tried logging in and both accounts were locked. I phoned TD and they said I needed a signature guarantee or medalliom signature to verify my identity. That required downloading a form from their website, filling it out, visiting a bank, maing it back to TD, and waiting for them to verify and unlock my accounts. This was a little frustrating since there's a lot of wasted time throughout that process and it couldn't be done online. About a month later, got an email that accounts were unlocked and good to go.

I'll note that my circumstance is not ordinary, but it has happened to others. I still don't know what caused the lock in the first place. Also not sure why the process to verify is so manual (download form, drive to bank, snail mail it back). In today's day and age, this should be streamlimed.

As for ibonds, my reasons are same as yours. I have some extra cash in the emergency fund that could use some better yield. I'm fine with the year lock up. I like that these are inflation protected, exempt from state taxes (which are high in California) and tax deferred. I plan on continually buying each year until my entire emergency fund is in ibonds. I might even continue if I want to build some extra cash up pre retirement to be able to whether a down year or two in the market.
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anon_investor
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Re: Treasury Direct?

Post by anon_investor »

ChiKid24 wrote: Fri Jun 11, 2021 10:24 pm ... I plan on continually buying each year until my entire emergency fund is in ibonds. I might even continue if I want to build some extra cash up pre retirement to be able to whether a down year or two in the market.
I have the same exact plan! :sharebeer
livesoft
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Re: Treasury Direct?

Post by livesoft »

rockstar wrote: Fri Jun 11, 2021 9:18 pm I'm thinking of buying $10k in I Bonds. ....

Are there any downsides to using Treasury Direct to buy them?
Is there any other way to buy them?
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samsoes
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Re: Treasury Direct?

Post by samsoes »

livesoft wrote: Sat Jun 12, 2021 5:12 am
rockstar wrote: Fri Jun 11, 2021 9:18 pm I'm thinking of buying $10k in I Bonds. ....

Are there any downsides to using Treasury Direct to buy them?
Is there any other way to buy them?
Yes. Please see IRS form 8888 (and instructions) for details.
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casun
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Re: Treasury Direct?

Post by casun »

people sometimes complain about treasurydirect.com but my experience has been just fine.
Topic Author
rockstar
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Re: Treasury Direct?

Post by rockstar »

casun wrote: Sat Jun 12, 2021 4:12 pm people sometimes complain about treasurydirect.com but my experience has been just fine.
How long do orders take to post?
WolfgangPauli
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Re: Treasury Direct?

Post by WolfgangPauli »

livesoft wrote: Sat Jun 12, 2021 5:12 am
rockstar wrote: Fri Jun 11, 2021 9:18 pm I'm thinking of buying $10k in I Bonds. ....

Are there any downsides to using Treasury Direct to buy them?
Is there any other way to buy them?
The only other way I know is to have them withhold up to $5K too much in taxes and then take your refund in paper bonds.. .
Twitter: @JAXbogleheads | EM: JAXbogleheads@gmail.com
RubyTuesday
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Re: Treasury Direct?

Post by RubyTuesday »

rockstar wrote: Sat Jun 12, 2021 4:16 pm
casun wrote: Sat Jun 12, 2021 4:12 pm people sometimes complain about treasurydirect.com but my experience has been just fine.
How long do orders take to post?
My recollection is that Once you have your account setup and a bank account setup, you fund with ach from bank (1-day?) and when the funds are there you can purchase bonds and they are issued immediately. My recollection may be flawed.
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placeholder
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Re: Treasury Direct?

Post by placeholder »

WolfgangPauli wrote: Sat Jun 12, 2021 4:32 pm The only other way I know is to have them withhold up to $5K too much in taxes and then take your refund in paper bonds.. .
Some have reported that any hitch or miscalculation will void the purchase and there's no recourse.
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bengal22
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Re: Treasury Direct?

Post by bengal22 »

RubyTuesday wrote: Sat Jun 12, 2021 4:58 pm
rockstar wrote: Sat Jun 12, 2021 4:16 pm
casun wrote: Sat Jun 12, 2021 4:12 pm people sometimes complain about treasurydirect.com but my experience has been just fine.
How long do orders take to post?
My recollection is that Once you have your account setup and a bank account setup, you fund with ach from bank (1-day?) and when the funds are there you can purchase bonds and they are issued immediately. My recollection may be flawed.
I was amazed but money was pulled from bank the morning of my order date. Quickest order execution I have ever seen.
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anon_investor
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Re: Treasury Direct?

Post by anon_investor »

bengal22 wrote: Sat Jun 12, 2021 5:03 pm
RubyTuesday wrote: Sat Jun 12, 2021 4:58 pm
rockstar wrote: Sat Jun 12, 2021 4:16 pm
casun wrote: Sat Jun 12, 2021 4:12 pm people sometimes complain about treasurydirect.com but my experience has been just fine.
How long do orders take to post?
My recollection is that Once you have your account setup and a bank account setup, you fund with ach from bank (1-day?) and when the funds are there you can purchase bonds and they are issued immediately. My recollection may be flawed.
I was amazed but money was pulled from bank the morning of my order date. Quickest order execution I have ever seen.
^^^This is what I experienced last month.
Makefile
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Re: Treasury Direct?

Post by Makefile »

anon_investor wrote: Fri Jun 11, 2021 10:19 pm
rockstar wrote: Fri Jun 11, 2021 9:18 pm I'm thinking of buying $10k in I Bonds. I have a $10k buffer in my emergency fund that I built up for COVID that I feel comfortable locking up for one year in an I Bond now that we're coming out of the pandemic. It's in my checking earning nothing along with the rest of my emergency fund. I understand that I'll lose 3 months of interest if redeem in less than 5 years. And I understand that my money is locked up for 1 year.

Are there any downsides to using Treasury Direct to buy them? I'm thinking of setting up an account this weekend, so I'd like folks input into their experience with Treasury Direct. How long does it take to link your checking account to their site? How long does it take to redeem and transfer money? Any downsides to using them for the purchase? Any limits on money transfers to their site? How long do these take?

Thanks.
Some people report having to mail in a form with a signature guarantee to open up/unlock their account. My spouse and I never had this issue. We have been buying I Bonds since last year. Our accounts each got locked once, but we were both able to unlock over the phone.
Based on the types of questions, I believe a lot of these sites that verify your identity by asking those "which of these streets has an association with you" or "how much is your monthly mortgage payment" or "with which of these creditors did you have a car loan opened in 2013" are pulled from your credit report. If your credit is frozen, or there simply isn't enough information in your credit report to generate the questions, I think that triggers TreasuryDirect to force the signature guarantee form to open the account. The same thing seems to happen sometimes when minors/18 year olds try to open their first Roth IRAs online.
casun
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Joined: Mon Apr 18, 2016 5:44 pm

Re: Treasury Direct?

Post by casun »

rockstar wrote: Sat Jun 12, 2021 4:16 pm
casun wrote: Sat Jun 12, 2021 4:12 pm people sometimes complain about treasurydirect.com but my experience has been just fine.
How long do orders take to post?
as others have mentioned, about a day.
flah
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Joined: Tue Feb 23, 2016 8:20 am

Re: Treasury Direct?

Post by flah »

WolfgangPauli wrote: Sat Jun 12, 2021 4:32 pm
livesoft wrote: Sat Jun 12, 2021 5:12 am
rockstar wrote: Fri Jun 11, 2021 9:18 pm I'm thinking of buying $10k in I Bonds. ....

Are there any downsides to using Treasury Direct to buy them?
Is there any other way to buy them?
The only other way I know is to have them withhold up to $5K too much in taxes and then take your refund in paper bonds.. .
File Form 4868 and submit extra payment with an automatic extension to effect a refund. You can do it using IRS Direct Pay. Then file the taxes with Form 8888 with the refund going to I bonds.
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