I Bonds Mega Thread (I Bond Heads Rejoice!)

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anon_investor
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Re: I Bonds variable rate @ 3.54% in May

Post by anon_investor »

Mel Lindauer wrote: Wed Oct 13, 2021 11:39 am
anon_investor wrote: Wed Oct 13, 2021 11:26 am
Mel Lindauer wrote: Wed Oct 13, 2021 11:21 am
Sheepdog wrote: Wed Oct 13, 2021 10:55 am
anon_investor wrote: Wed Oct 13, 2021 9:38 am

How old are your 3.6% fixed rate I Bonds???
They were purchased in 6/2000 and 7 and 9 and 10/2000---- $30,000 worth total. They are worth today $100,768 with more growth to come.
Thanks Mel!
Woof

p.s. There were more purchased after those earning 3.0 to 3.4% fixed!
You're welcome! I ate my own cooking, so I've got lots of those 3.6% I Bonds as well as others in the 3.0 to 3.4% range. The gift that keeps on giving!
And I was happy just to snag some 0.2% fixed rate I Bonds in early 2020... :shock:
I'm sure a lot of folks who own the 0% fixed rate would love to have a boatload of those 0.2% fixed rate I Bonds that you own.
That is a good way to look at it. :sharebeer
Now the question is if I try to get I Bonds with my 2021 tax refund whether the IRS will process it fast enough for me to get $5k at the 7.12% variable rate...
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by JayDee37 »

Will paper I bonds obtained via the Federal tax return process start with the 7.12% rate for 12 months, since they are issued during that timeframe?

I usually try to minimize taxes owed/refund due, so it's never felt worthwhile to ask for paper I bonds in the years where I am getting a few hundred dollars back. However, I typically put a couple hundred dollars from each paycheck into my cash ER/sinking fund. This year it might make sense to redirect those monthly cash savings into overpaying my Federal taxes for the last few months of the year, if I can then request paper I bonds that will get a much higher rate than my HYSA for now. This would be in addition to buying electronic I bonds from TD in January...

Thoughts?
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Re: I Bonds variable rate @ 3.54% in May

Post by billthecat »

anon_investor wrote: Wed Oct 13, 2021 11:25 am
billthecat wrote: Wed Oct 13, 2021 11:15 am
anon_investor wrote: Tue Oct 12, 2021 5:52 pm
billthecat wrote: Tue Oct 12, 2021 5:42 pm
anon_investor wrote: Tue Oct 12, 2021 5:00 pm

The moral of the story is S&P500 and chill... I think...
I'm buying I Bonds not as an alternative to stocks. Part of my asset allocation includes a cash allocation, and so I'm buying I Bonds as part of that. I'll gladly take 3.54% (tax deferred and state tax free) over 0.5%.
Me too I Bonds are part of my 5-10% "fixed income" allocation.
Out of my total net worth, I slice off the top 12 mos. of expenses (at a moderate level), in cash. Of the remainder, my age - 11 is fixed income. Of the fixed income, 1/8th is cash (which, to me, includes anything that is not marked to market - checking, savings, I Bonds, CDs, money market, etc.). The other 7/8ths of my FI is total bond. And so 1/8th of FI plus the 12 mos. expenses is in cash (which currently translates to 6.3% of total net worth, 14.7% of FI).
I am currently targeting a very aggressive 95/5-90/10 AA. I count my EF as part of my FI AA. Currently my AA is around 93/7. My goal is to keep about 2 months of expenses in FDIC insured accounts and the rest of my fixed income in I Bonds. I am also in the process of trying to get my FI% closer to 10%, which I will do with my 2022 I Bond purchase (funded from my anticipated 2021 bonus). Right now my FI allocation is about 60% I Bonds and 40% "cash" (FDIC insured savings accounts and no penalty CDs).
My stomach couldn't handle that 90-95% stock. After losing hundreds of thousands on some investments (albeit, not stocks or bonds), and not wanting to work much longer, I've become conservative.
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Re: I Bonds variable rate @ 3.54% in May

Post by anon_investor »

billthecat wrote: Wed Oct 13, 2021 11:54 am
anon_investor wrote: Wed Oct 13, 2021 11:25 am
billthecat wrote: Wed Oct 13, 2021 11:15 am
anon_investor wrote: Tue Oct 12, 2021 5:52 pm
billthecat wrote: Tue Oct 12, 2021 5:42 pm

I'm buying I Bonds not as an alternative to stocks. Part of my asset allocation includes a cash allocation, and so I'm buying I Bonds as part of that. I'll gladly take 3.54% (tax deferred and state tax free) over 0.5%.
Me too I Bonds are part of my 5-10% "fixed income" allocation.
Out of my total net worth, I slice off the top 12 mos. of expenses (at a moderate level), in cash. Of the remainder, my age - 11 is fixed income. Of the fixed income, 1/8th is cash (which, to me, includes anything that is not marked to market - checking, savings, I Bonds, CDs, money market, etc.). The other 7/8ths of my FI is total bond. And so 1/8th of FI plus the 12 mos. expenses is in cash (which currently translates to 6.3% of total net worth, 14.7% of FI).
I am currently targeting a very aggressive 95/5-90/10 AA. I count my EF as part of my FI AA. Currently my AA is around 93/7. My goal is to keep about 2 months of expenses in FDIC insured accounts and the rest of my fixed income in I Bonds. I am also in the process of trying to get my FI% closer to 10%, which I will do with my 2022 I Bond purchase (funded from my anticipated 2021 bonus). Right now my FI allocation is about 60% I Bonds and 40% "cash" (FDIC insured savings accounts and no penalty CDs).
My stomach couldn't handle that 90-95% stock. After losing hundreds of thousands on some investments (albeit, not stocks or bonds), and not wanting to work much longer, I've become conservative.
I am still a good ways away from retirement, so I can handle the volatility right now. But my plan is to build up my I Bond pile. Before retirement I will do some rebalancing in my 401k to get to a comfortable retirement ready AA (probably using total bond). I will then be able to do all my neccessary rebalancing within my 401k (or tIRA if I roll it over). With my current AA, not much rebalancing is needed, using new money to rebalance is pretty effective, obviously this goes away in retirement.
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by Escapevelocity »

AlmstRtrd wrote: Wed Oct 13, 2021 10:41 am
Tom_T wrote: Wed Oct 13, 2021 10:34 am I am getting some money soon in time for my first-ever I Bond purchase in November. Myself and spouse. :)
DW and I hold a bunch of I-Bonds and love them as a "deep cash" holding. But I think it's important to remember that over time they are really only "inflation neutral'. So that 7.12% looks quite juicy at the moment but it's just locked in for six months and may not ultimately be very meaningful over a long holding period. I am just pointing out the obvious, I guess.
Inflation neutral on a risk free basis is amazing relative to all other bonds available to the average investor.
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by Escapevelocity »

masteraleph wrote: Wed Oct 13, 2021 10:51 am One heck of a lot better than a CD!

Edit: Not sure if I have the spare cash flow at the moment, but seriously considering selling some taxable bonds (with little appreciation) to buy bonds here.
Literally anyone in the USA that plans to have a bond allocation in their portfolio long term would be dumb not to max out their I-Bond purchase every single year. It is a free gift from the government.
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by whodidntante »

The real news here is that inflation in the world's largest economy has become a rabid badger.
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by dboeger1 »

JayDee37 wrote: Wed Oct 13, 2021 11:52 am Will paper I bonds obtained via the Federal tax return process start with the 7.12% rate for 12 months, since they are issued during that timeframe?

I usually try to minimize taxes owed/refund due, so it's never felt worthwhile to ask for paper I bonds in the years where I am getting a few hundred dollars back. However, I typically put a couple hundred dollars from each paycheck into my cash ER/sinking fund. This year it might make sense to redirect those monthly cash savings into overpaying my Federal taxes for the last few months of the year, if I can then request paper I bonds that will get a much higher rate than my HYSA for now. This would be in addition to buying electronic I bonds from TD in January...

Thoughts?
I was thinking of doing the same, but probably won't just because we're expecting a baby soon and our finances will get complicated enough just figuring out how our employers' and state's parental leave policies work. I don't really know when to expect to receive certain payments, and I was already running tight on cash after a recent HVAC installation. So realistically, I just don't have the margin at this time to make moves like that. But if you do, I think it's not a bad idea.

Just keep in mind that rate won't last forever, especially if the inflation ends up being transient. You may end up getting 7.12% for 6 months followed by 0% for the foreseeable future. If you look at historical rates, 0% variable was not uncommon. Then there are the early redemption penalties/restrictions. So I wouldn't necessarily recommend going overboard on your bond allocation just for this temporary rate. But if you're looking to increase your bond allocation or establish a higher-return tier of your cash reserves, it seems to be as good a time as any to do it. Those are the reasons I jumped on the 3.54% rate, so now I'm quite happy to see it jump to 7.12%. Well, at least as happy as one can be about inflation, I suppose. I certainly don't want to pay 7% more for stuff, lol.
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by anon_investor »

JayDee37 wrote: Wed Oct 13, 2021 11:52 am Will paper I bonds obtained via the Federal tax return process start with the 7.12% rate for 12 months, since they are issued during that timeframe?

I usually try to minimize taxes owed/refund due, so it's never felt worthwhile to ask for paper I bonds in the years where I am getting a few hundred dollars back. However, I typically put a couple hundred dollars from each paycheck into my cash ER/sinking fund. This year it might make sense to redirect those monthly cash savings into overpaying my Federal taxes for the last few months of the year, if I can then request paper I bonds that will get a much higher rate than my HYSA for now. This would be in addition to buying electronic I bonds from TD in January...

Thoughts?
It will depend if they issue the paper I Bonds before May 1, 2022.
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Re: I Bonds variable rate @ 3.54% in May

Post by nyinvestor718 »

https://tipswatch.com/2021/10/13/inflat ... la-at-5-9/
Over the March to September period, inflation rose 3.56%, the largest six-month increase in the 23-year history of I Bonds. That increase means the inflation-adjusted rate will rise to 7.12%, annualized, for six months. That is up from 3.54% currently.
Judge Learned Hand: "Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury".
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Re: I Bonds variable rate @ 3.54% in May

Post by Cheez-It Guy »

Nice!
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by Mel Lindauer »

anon_investor wrote: Wed Oct 13, 2021 12:37 pm
JayDee37 wrote: Wed Oct 13, 2021 11:52 am Will paper I bonds obtained via the Federal tax return process start with the 7.12% rate for 12 months, since they are issued during that timeframe?

I usually try to minimize taxes owed/refund due, so it's never felt worthwhile to ask for paper I bonds in the years where I am getting a few hundred dollars back. However, I typically put a couple hundred dollars from each paycheck into my cash ER/sinking fund. This year it might make sense to redirect those monthly cash savings into overpaying my Federal taxes for the last few months of the year, if I can then request paper I bonds that will get a much higher rate than my HYSA for now. This would be in addition to buying electronic I bonds from TD in January...

Thoughts?
It will depend if they issue the paper I Bonds before May 1, 2022.
Yep, it's the MONTH of issue that counts, not the processing date or the date you receive them.
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Re: I Bonds variable rate @ 3.54% in May

Post by Mel Lindauer »

anon_investor wrote: Wed Oct 13, 2021 11:45 am
Mel Lindauer wrote: Wed Oct 13, 2021 11:39 am
anon_investor wrote: Wed Oct 13, 2021 11:26 am
Mel Lindauer wrote: Wed Oct 13, 2021 11:21 am
Sheepdog wrote: Wed Oct 13, 2021 10:55 am

They were purchased in 6/2000 and 7 and 9 and 10/2000---- $30,000 worth total. They are worth today $100,768 with more growth to come.
Thanks Mel!
Woof

p.s. There were more purchased after those earning 3.0 to 3.4% fixed!
You're welcome! I ate my own cooking, so I've got lots of those 3.6% I Bonds as well as others in the 3.0 to 3.4% range. The gift that keeps on giving!
And I was happy just to snag some 0.2% fixed rate I Bonds in early 2020... :shock:
I'm sure a lot of folks who own the 0% fixed rate would love to have a boatload of those 0.2% fixed rate I Bonds that you own.
That is a good way to look at it. :sharebeer
Now the question is if I try to get I Bonds with my 2021 tax refund whether the IRS will process it fast enough for me to get $5k at the 7.12% variable rate...
Hopefully they'll get it done in the next six months. Any issue date in that time frame will still get six months at the new higher rate.
Best Regards - Mel | | Semper Fi
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Re: I Bonds variable rate @ 3.54% in May

Post by anon_investor »

Mel Lindauer wrote: Wed Oct 13, 2021 1:06 pm
anon_investor wrote: Wed Oct 13, 2021 11:45 am
Mel Lindauer wrote: Wed Oct 13, 2021 11:39 am
anon_investor wrote: Wed Oct 13, 2021 11:26 am
Mel Lindauer wrote: Wed Oct 13, 2021 11:21 am

You're welcome! I ate my own cooking, so I've got lots of those 3.6% I Bonds as well as others in the 3.0 to 3.4% range. The gift that keeps on giving!
And I was happy just to snag some 0.2% fixed rate I Bonds in early 2020... :shock:
I'm sure a lot of folks who own the 0% fixed rate would love to have a boatload of those 0.2% fixed rate I Bonds that you own.
That is a good way to look at it. :sharebeer
Now the question is if I try to get I Bonds with my 2021 tax refund whether the IRS will process it fast enough for me to get $5k at the 7.12% variable rate...
Hopefully they'll get it done in the next six months. Any issue date in that time frame will still get six months at the new higher rate.
For my 2021 tax return (filed in 2022), I doubt I can get it out sooner than March 2022, that would be really tight for paper I Bonds to be issued before May 1, 2022. At least I know my spouse and I will be buying $20k worth of electronic I Bonds in early 2022!
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by JayDee37 »

dboeger1 wrote: Wed Oct 13, 2021 12:31 pm Just keep in mind that rate won't last forever, especially if the inflation ends up being transient. You may end up getting 7.12% for 6 months followed by 0% for the foreseeable future. If you look at historical rates, 0% variable was not uncommon. Then there are the early redemption penalties/restrictions. So I wouldn't necessarily recommend going overboard on your bond allocation just for this temporary rate. But if you're looking to increase your bond allocation or establish a higher-return tier of your cash reserves, it seems to be as good a time as any to do it.
I am slowly transitioning some of my EF to I bonds given the very low interest rates available in HYSAs at the moment. So I don't include the I Bonds in my overall AA as part of the bond holding, they're part of my EF/sinking fund.

It is true that the variable rate is likely to drop. But the question for me is, will it drop below the interest rate on my HYSA EF?

Even if it does drop all the way to zero, on an annualized basis the 6 months of the MUCH higher ~7% interest combined with 6 months of zero interest would still be more than the 0.5% I'm getting at the HYSA, and after the 1 year lockout period I could sell if I wanted, only the losing the last 3 months of interest, which if the rate has dropped below the HYSA rate is not much of a penalty. Plus, I think it is unlikely that the I bond variable rate would drop to less than 1% at the same time that the HYSA interest rate would rise to more than 1%, given how those things are calculated.

Basically I'm talking myself into doing this. The big question then becomes whether the IRS will process my refund and issue the I bonds prior to May 1.

Does anyone have experience with the time-frame between filing a return requesting an I bond refund? If I file in, say, February, how likely is it that the bonds will be issued by the end of April?
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Re: I Bonds variable rate @ 3.54% in May

Post by Mel Lindauer »

anon_investor wrote: Wed Oct 13, 2021 1:11 pm
Mel Lindauer wrote: Wed Oct 13, 2021 1:06 pm
anon_investor wrote: Wed Oct 13, 2021 11:45 am
Mel Lindauer wrote: Wed Oct 13, 2021 11:39 am
anon_investor wrote: Wed Oct 13, 2021 11:26 am

And I was happy just to snag some 0.2% fixed rate I Bonds in early 2020... :shock:
I'm sure a lot of folks who own the 0% fixed rate would love to have a boatload of those 0.2% fixed rate I Bonds that you own.
That is a good way to look at it. :sharebeer
Now the question is if I try to get I Bonds with my 2021 tax refund whether the IRS will process it fast enough for me to get $5k at the 7.12% variable rate...
Hopefully they'll get it done in the next six months. Any issue date in that time frame will still get six months at the new higher rate.
For my 2021 tax return (filed in 2022), I doubt I can get it out sooner than March 2022, that would be really tight for paper I Bonds to be issued before May 1, 2022. At least I know my spouse and I will be buying $20k worth of electronic I Bonds in early 2022!
I thought you were waiting for them to be issued as part of your 2020 tax refund which would probably be more realistic. Getting them as part of your 2021 tax return could certainly be a timing problem.
Best Regards - Mel | | Semper Fi
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by BogleTails »

I purchased $5000 each for myself and wife at the end of September my from cash allocation that has been in HYSA.

Does it make sense to add $5000 each before the end of October or wait until the end of Nov for the change in rate?

I know we can't predict the future rates but I'm thinking I may make more interest over the next year with 6 months at the current rate and then 6 months at the new rate. I plan to buy more I Bonds next year as well.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by tomsense76 »

donaldfair71 wrote: Wed Oct 13, 2021 10:01 am
sapphire96 wrote: Wed Oct 13, 2021 8:32 am
goodenyou wrote: Wed Oct 13, 2021 8:27 am This thread has run its course.

The new thread will be "I Bonds Variable Rate @ 7.12% in November"
Or just rename it to “I Bonds Mega Thread.”
"I Bond Heads Rejoice!"
This thread really has taken on a life of its own since providing the original update.

By popular demand it has been renamed :D
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by Jags4186 »

Can someone give a quick primer on iBonds for those of us who’s entire investing life have not had interesting iBond rates? 7.12% guaranteed is quite good compared to even savings account bonuses…

I know I need to open an account at Treasury Direct.

What is the iBond purchase limit? Is it an annual limit? (I.E. I can buy $X in December and then $X again in January?)
For a married couple can you each purchase the same amount or is it lumped together?
How long do you have to hold iBonds before you can cash them in? Is it like buying and selling a bond fund?
Tax exempt/implications?
I’ve heard I can overpay my income taxes and receive refund as iBonds. Is that still true?
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by goodenyou »

Jags4186 wrote: Wed Oct 13, 2021 1:40 pm Can someone give a quick primer on iBonds for those of us who’s entire investing life have not had interesting iBond rates? 7.12% guaranteed is quite good compared to even savings account bonuses…

I know I need to open an account at Treasury Direct.

What is the iBond purchase limit? Is it an annual limit? (I.E. I can buy $X in December and then $X again in January?)
For a married couple can you each purchase the same amount or is it lumped together?
How long do you have to hold iBonds before you can cash them in? Is it like buying and selling a bond fund?
Tax exempt/implications?
I’ve heard I can overpay my income taxes and receive refund as iBonds. Is that still true?
https://www.bogleheads.org/wiki/I_savings_bonds
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by Candor »

dboeger1 wrote: Wed Oct 13, 2021 12:31 pm
JayDee37 wrote: Wed Oct 13, 2021 11:52 am Will paper I bonds obtained via the Federal tax return process start with the 7.12% rate for 12 months, since they are issued during that timeframe?

I usually try to minimize taxes owed/refund due, so it's never felt worthwhile to ask for paper I bonds in the years where I am getting a few hundred dollars back. However, I typically put a couple hundred dollars from each paycheck into my cash ER/sinking fund. This year it might make sense to redirect those monthly cash savings into overpaying my Federal taxes for the last few months of the year, if I can then request paper I bonds that will get a much higher rate than my HYSA for now. This would be in addition to buying electronic I bonds from TD in January...

Thoughts?
I was thinking of doing the same, but probably won't just because we're expecting a baby soon and our finances will get complicated enough just figuring out how our employers' and state's parental leave policies work. I don't really know when to expect to receive certain payments, and I was already running tight on cash after a recent HVAC installation. So realistically, I just don't have the margin at this time to make moves like that. But if you do, I think it's not a bad idea.

Just keep in mind that rate won't last forever, especially if the inflation ends up being transient. You may end up getting 7.12% for 6 months followed by 0% for the foreseeable future. If you look at historical rates, 0% variable was not uncommon. Then there are the early redemption penalties/restrictions. So I wouldn't necessarily recommend going overboard on your bond allocation just for this temporary rate. But if you're looking to increase your bond allocation or establish a higher-return tier of your cash reserves, it seems to be as good a time as any to do it. Those are the reasons I jumped on the 3.54% rate, so now I'm quite happy to see it jump to 7.12%. Well, at least as happy as one can be about inflation, I suppose. I certainly don't want to pay 7% more for stuff, lol.
The fixed rate of 0% is not uncommon. The variable has only been 0% twice since 1998, when they were introduced.

https://www.treasurydirect.gov/indiv/re ... dterms.htm
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by anon_investor »

BogleTails wrote: Wed Oct 13, 2021 1:26 pm I purchased $5000 each for myself and wife at the end of September my from cash allocation that has been in HYSA.

Does it make sense to add $5000 each before the end of October or wait until the end of Nov for the change in rate?

I know we can't predict the future rates but I'm thinking I may make more interest over the next year with 6 months at the current rate and then 6 months at the new rate. I plan to buy more I Bonds next year as well.
Personally, I would buy this month to lock in 3.54% for the first 6 months and 7.12% for the 2nd 6 months. No one knows what the May 1, 2022 variable rate will be. 3.54% is a great rate, though it looks measily compared to 7.12%.
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by Grt2bOutdoors »

anon_investor wrote: Wed Oct 13, 2021 1:55 pm
BogleTails wrote: Wed Oct 13, 2021 1:26 pm I purchased $5000 each for myself and wife at the end of September my from cash allocation that has been in HYSA.

Does it make sense to add $5000 each before the end of October or wait until the end of Nov for the change in rate?

I know we can't predict the future rates but I'm thinking I may make more interest over the next year with 6 months at the current rate and then 6 months at the new rate. I plan to buy more I Bonds next year as well.
Personally, I would buy this month to lock in 3.54% for the first 6 months and 7.12% for the 2nd 6 months. No one knows what the May 1, 2022 variable rate will be. 3.54% is a great rate, though it looks measily compared to 7.12%.
Buy in October and earn 5.33 percent for the first 12 months. Still very attractive seeing that junk bonds don’t offer a risk free rate that high!
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by AnnetteLouisan »

Oh my goodness! I was expecting over 6 percent but not 7.12! Thank you, Jason Zweig.
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by anon_investor »

Grt2bOutdoors wrote: Wed Oct 13, 2021 2:14 pm
anon_investor wrote: Wed Oct 13, 2021 1:55 pm
BogleTails wrote: Wed Oct 13, 2021 1:26 pm I purchased $5000 each for myself and wife at the end of September my from cash allocation that has been in HYSA.

Does it make sense to add $5000 each before the end of October or wait until the end of Nov for the change in rate?

I know we can't predict the future rates but I'm thinking I may make more interest over the next year with 6 months at the current rate and then 6 months at the new rate. I plan to buy more I Bonds next year as well.
Personally, I would buy this month to lock in 3.54% for the first 6 months and 7.12% for the 2nd 6 months. No one knows what the May 1, 2022 variable rate will be. 3.54% is a great rate, though it looks measily compared to 7.12%.
Buy in October and earn 5.33 percent for the first 12 months. Still very attractive seeing that junk bonds don’t offer a risk free rate that high!
Haha, 5.33%, I remember when FDIC insured online HYSA offered that much... That sure beats 1 year CDs right now.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by anon_investor »

tomsense76 wrote: Wed Oct 13, 2021 1:33 pm
donaldfair71 wrote: Wed Oct 13, 2021 10:01 am
sapphire96 wrote: Wed Oct 13, 2021 8:32 am
goodenyou wrote: Wed Oct 13, 2021 8:27 am This thread has run its course.

The new thread will be "I Bonds Variable Rate @ 7.12% in November"
Or just rename it to “I Bonds Mega Thread.”
"I Bond Heads Rejoice!"
This thread really has taken on a life of its own since providing the original update.

By popular demand it has been renamed :D
When I started buying I Bonds just last year (2020), there was not all this hoopla. There was still a positive fixed rate too...
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by BogleTails »

anon_investor wrote: Wed Oct 13, 2021 1:55 pm
BogleTails wrote: Wed Oct 13, 2021 1:26 pm I purchased $5000 each for myself and wife at the end of September my from cash allocation that has been in HYSA.

Does it make sense to add $5000 each before the end of October or wait until the end of Nov for the change in rate?

I know we can't predict the future rates but I'm thinking I may make more interest over the next year with 6 months at the current rate and then 6 months at the new rate. I plan to buy more I Bonds next year as well.
Personally, I would buy this month to lock in 3.54% for the first 6 months and 7.12% for the 2nd 6 months. No one knows what the May 1, 2022 variable rate will be. 3.54% is a great rate, though it looks measily compared to 7.12%.
Thanks! I will take your recommendation and purchase before the end of this month.
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by Barefootgirl »

This is great news. I'm planning to fill out my 2021 limit, but more excited about the new adjustment on 20 years worth of bonds sitting in my TD account... FWIW, this feels overdue.
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by dboeger1 »

Candor wrote: Wed Oct 13, 2021 1:52 pm
dboeger1 wrote: Wed Oct 13, 2021 12:31 pm
JayDee37 wrote: Wed Oct 13, 2021 11:52 am Will paper I bonds obtained via the Federal tax return process start with the 7.12% rate for 12 months, since they are issued during that timeframe?

I usually try to minimize taxes owed/refund due, so it's never felt worthwhile to ask for paper I bonds in the years where I am getting a few hundred dollars back. However, I typically put a couple hundred dollars from each paycheck into my cash ER/sinking fund. This year it might make sense to redirect those monthly cash savings into overpaying my Federal taxes for the last few months of the year, if I can then request paper I bonds that will get a much higher rate than my HYSA for now. This would be in addition to buying electronic I bonds from TD in January...

Thoughts?
I was thinking of doing the same, but probably won't just because we're expecting a baby soon and our finances will get complicated enough just figuring out how our employers' and state's parental leave policies work. I don't really know when to expect to receive certain payments, and I was already running tight on cash after a recent HVAC installation. So realistically, I just don't have the margin at this time to make moves like that. But if you do, I think it's not a bad idea.

Just keep in mind that rate won't last forever, especially if the inflation ends up being transient. You may end up getting 7.12% for 6 months followed by 0% for the foreseeable future. If you look at historical rates, 0% variable was not uncommon. Then there are the early redemption penalties/restrictions. So I wouldn't necessarily recommend going overboard on your bond allocation just for this temporary rate. But if you're looking to increase your bond allocation or establish a higher-return tier of your cash reserves, it seems to be as good a time as any to do it. Those are the reasons I jumped on the 3.54% rate, so now I'm quite happy to see it jump to 7.12%. Well, at least as happy as one can be about inflation, I suppose. I certainly don't want to pay 7% more for stuff, lol.
The fixed rate of 0% is not uncommon. The variable has only been 0% twice since 1998, when they were introduced.

https://www.treasurydirect.gov/indiv/re ... dterms.htm
Huh, that's funny. I had looked at that page not too long ago but must have mixed up the rates in my mind. I could have sworn 0% variable was more common. Thanks for correcting me.
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by Broken Man 1999 »

7.12% variable + 3.4%/3.6% fixed on the I-bonds I bought two decades ago makes me a very happy camper.

The 5.9% increase in our SS benefits doesn't suck, either. My excitement is tempered somewhat until I know what the Part B Medicare cost will be.

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Re: New I Bond Variable Rate 7.12% for November 2021

Post by anon_investor »

Broken Man 1999 wrote: Wed Oct 13, 2021 4:02 pm 7.12% variable + 3.4%/3.6% fixed on the I-bonds I bought two decades ago makes me a very happy camper.

The 5.9% increase in our SS benefits doesn't suck, either. My excitement is tempered somewhat until I know what the Part B Medicare cost will be.

Broken Man 1999
Does the 5.9% increase in SS make up for last year's meager 1.3% increase?

The 7.12% is crazy, especially when 30 year treasuries barely offer 2%...
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by LadyGeek »

I merged HueyLD's thread into a similar discussion (I Bonds Mega Thread).
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Orthodoc1. »

Glad I have been buying for many years. Some old ones will be paying over 10% with virtually no risk. That is something to write home about!
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by Raycpact »

Broken Man 1999 wrote: Wed Oct 13, 2021 4:02 pm 7.12% variable + 3.4%/3.6% fixed on the I-bonds I bought two decades ago makes me a very happy camper.

The 5.9% increase in our SS benefits doesn't suck, either. My excitement is tempered somewhat until I know what the Part B Medicare cost will be.

Broken Man 1999
I am expecting that Medicare costs are down significantly because many put off surgeries and routine doctor visits.
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by Mel Lindauer »

Raycpact wrote: Wed Oct 13, 2021 5:27 pm
Broken Man 1999 wrote: Wed Oct 13, 2021 4:02 pm 7.12% variable + 3.4%/3.6% fixed on the I-bonds I bought two decades ago makes me a very happy camper.

The 5.9% increase in our SS benefits doesn't suck, either. My excitement is tempered somewhat until I know what the Part B Medicare cost will be.

Broken Man 1999
I am expecting that Medicare costs are down significantly because many put off surgeries and routine doctor visits.
Has it ever gone down or not gone up? Not that I can recall.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by AnnetteLouisan »

Curious how it works with the tax refund. I bought 10k this year. If I get a tax refund of $5k in 2022 on my 2021 taxes and buy ibonds, will it fill my 2021 allotment or my 2022 allotment?
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by Dusn »

whodidntante wrote: Wed Oct 13, 2021 12:28 pm The real news here is that inflation in the world's largest economy has become a rabid badger.
The inflation is worldwide.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by anon_investor »

AnnetteLouisan wrote: Wed Oct 13, 2021 5:36 pm Curious how it works with the tax refund. I bought 10k this year. If I get a tax refund of $5k in 2022 on my 2021 taxes and buy ibonds, will it fill my 2021 allotment or my 2022 allotment?
Paper I Bonds do not count towards your $10k annual limit on electronic I Bonds.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by AnnetteLouisan »

anon_investor wrote: Wed Oct 13, 2021 5:38 pm
AnnetteLouisan wrote: Wed Oct 13, 2021 5:36 pm Curious how it works with the tax refund. I bought 10k this year. If I get a tax refund of $5k in 2022 on my 2021 taxes and buy ibonds, will it fill my 2021 allotment or my 2022 allotment?
Paper I Bonds do not count towards your $10k annual limit on electronic I Bonds.
Yes I know. I‘m saying, how does it work with the tax refund? Both the mechanics and which year‘s refund applies in which year? Do I still have a chance to use my 2021 refund to get an additional $5k, or can I use my 2022 refund to get my $5k for 2021?
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by whodidntante »

Does anyone else find it ironic that we are basically celebrating rampant inflation and paying a lot of tax?
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by anon_investor »

AnnetteLouisan wrote: Wed Oct 13, 2021 5:43 pm
anon_investor wrote: Wed Oct 13, 2021 5:38 pm
AnnetteLouisan wrote: Wed Oct 13, 2021 5:36 pm Curious how it works with the tax refund. I bought 10k this year. If I get a tax refund of $5k in 2022 on my 2021 taxes and buy ibonds, will it fill my 2021 allotment or my 2022 allotment?
Paper I Bonds do not count towards your $10k annual limit on electronic I Bonds.
Yes I know. I‘m saying, how does it work with the tax refund? Both the mechanics and which year‘s refund applies in which year? Do I still have a chance to use my 2021 refund to get an additional $5k, or can I use my 2022 refund to get my $5k for 2021?
The paper I Bonds purchased in calendar year 2022 will come from your tax refund for tax year 2021 that is filed in calendar year 2022.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by AnnetteLouisan »

Thanks! If I received a tax refund in 2021 is it too late to buy paper Ibonds up to $5k this year? Is it something I have to claim when I file my taxes or can I buy them post hoc after I receive my refund?
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by FinancialDave »

AnnetteLouisan wrote: Wed Oct 13, 2021 5:57 pm Thanks! If I received a tax refund in 2021 is it too late to buy paper Ibonds up to $5k this year? Is it something I have to claim when I file my taxes or can I buy them post hoc after I receive my refund?
The issue is you can only buy them with a refund. If you already got the refund it is too late - IMO and that of the financebuff.

Here is a link that explains how you could pay an extra payment to the IRS and ask for an extension, but you are way past that.

https://thefinancebuff.com/overpay-taxe ... -tips.html
Last edited by FinancialDave on Wed Oct 13, 2021 6:14 pm, edited 1 time in total.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by AnnetteLouisan »

FinancialDave wrote: Wed Oct 13, 2021 6:06 pm
AnnetteLouisan wrote: Wed Oct 13, 2021 5:57 pm Thanks! If I received a tax refund in 2021 is it too late to buy paper Ibonds up to $5k this year? Is it something I have to claim when I file my taxes or can I buy them post hoc after I receive my refund?
The issue is you can only buy them with a refund. If you already got the refund it is too late - IMO.
That makes sense. That’s what I thought but figured I‘d ask. So next year, do we check a box on our taxes when we file or how do we get the paper ibonds. Do we ascertain that we are getting a refund and then apply on TD?
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by hyperon »

whodidntante wrote: Wed Oct 13, 2021 5:43 pm Does anyone else find it ironic that we are basically celebrating rampant inflation and paying a lot of tax?
I was actually just thinking this. We are excited to be getting a 0% real return because most cash is currently earning a very negative real return in HYSA (or treasuries if you count those as cash).

Don't get me wrong, I am a big fan of I-Bonds and have been buying $10k for the last few years to fuel future spending and my emergency fund. But this high rate for I-Bonds means the rest of our investments are earning a lower real rate. I have far more invested NOT in I-Bonds.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by FinancialDave »

AnnetteLouisan wrote: Wed Oct 13, 2021 6:09 pm
FinancialDave wrote: Wed Oct 13, 2021 6:06 pm
AnnetteLouisan wrote: Wed Oct 13, 2021 5:57 pm Thanks! If I received a tax refund in 2021 is it too late to buy paper Ibonds up to $5k this year? Is it something I have to claim when I file my taxes or can I buy them post hoc after I receive my refund?
The issue is you can only buy them with a refund. If you already got the refund it is too late - IMO.
That makes sense. That’s what I thought but figured I‘d ask. So next year, do we check a box on our taxes when we file or how do we get the paper ibonds. Do we ascertain that we are getting a refund and then apply on TD?
Here is a helpful article that I linked to above that explains the whole process for different tax software programs:

https://thefinancebuff.com/overpay-taxe ... -tips.html
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by AnnetteLouisan »

Many thanks!
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by SantaClaraSurfer »

whodidntante wrote: Wed Oct 13, 2021 5:43 pm Does anyone else find it ironic that we are basically celebrating rampant inflation and paying a lot of tax?
By "a lot of tax" are you referring to this?

Tax Advantages of Series I and EE Savings Bonds
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Ron Ronnerson »

whodidntante wrote: Wed Oct 13, 2021 5:43 pm Does anyone else find it ironic that we are basically celebrating rampant inflation and paying a lot of tax?
Situations can vary. I’m definitely happy about this. We (my wife and I) bought $20k of I Bonds last month and are planning to purchase another $20k-$30k in January. The money for this came from a recent cash-out refi that is locked for 30 years at 2.375% and is actually a little lower due to itemizing on state taxes.

We previously used the money from the cash-out refi to churn bank accounts and earned $5k in bonuses during the first part of this year. Now that we’ve done many of the good bonus offers already, we’re beginning to direct the same money toward I Bonds.

We’re in the 12% federal tax bracket so taxes aren’t bad. If inflation stays high for a while, maybe we’ll hang on to some of the I Bonds to pay for our daughter’s college expenses when the time comes and avoid having to pay tax on the growth all together.

We live in a VHCOL area where housing makes up a large portion of our expenses. The mortgage payment is fixed and, due to Prop 13 in California, our property taxes only go up 2% per year based on the purchase price of the home from 2010. So our personal rate of inflation isn’t so bad. So long as pay raises at least sort of keep pace with inflation, it will likely be a net positive for us.
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Re: New I Bond Variable Rate 7.12% for November 2021

Post by FactualFran »

Mel Lindauer wrote: Wed Oct 13, 2021 5:33 pm Has it ever gone down or not gone up? Not that I can recall.
According to a table on page 79 of the 2020 Medicare Trustees Report, the standard medicare Part B premium was lower in 2012 ($99.90) than it was in 2011 ($115.40), and it was the same in 2014 and 2015 as in 2013 ($104.90).

Interesting. Even though I was in Medicare at that time, it felt as if the total Medicare costs were always higher. Probably because the other things went up (Part D, Supplemental).
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