I Bonds Mega Thread (I Bond Heads Rejoice!)

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Mel Lindauer
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Mel Lindauer »

billthecat wrote: Mon Oct 25, 2021 12:18 am
SnowBog wrote: Sun Oct 24, 2021 5:42 pm
thefrozentin wrote: Sun Oct 24, 2021 5:33 pm I am new to Ibonds and invested 10 large into my account in April. However, my balance still shows 10k without any interest added since April. Do I have to wait for a year to see that? TIA.
You may need to click in a level deeper. If I recall the initial view did not show the extra interest.

But when you click in to the next level of details, you should be able to see the interest.

Note, for bonds < 5 years old, you won't see the last 3 months of interest. But you should see the prior months by now.
When you reach 5 years does the last three months suddenly get added to your balance?
Yes. You'll feel like you hit the jackpot!
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by thefrozentin »

Ricchan wrote: Sun Oct 24, 2021 5:52 pm
SnowBog wrote: Sun Oct 24, 2021 5:42 pm
thefrozentin wrote: Sun Oct 24, 2021 5:33 pm I am new to Ibonds and invested 10 large into my account in April. However, my balance still shows 10k without any interest added since April. Do I have to wait for a year to see that? TIA.
You may need to click in a level deeper. If I recall the initial view did not show the extra interest.

But when you click in to the next level of details, you should be able to see the interest.

Note, for bonds < 5 years old, you won't see the last 3 months of interest. But you should see the prior months by now.
At the bottom of the Current Holdings page, I see this:

Image

I purchased these in May of this year. Assuming the $60 is 2 months of interest with the other 3 months not being shown, that's a 3.6% rate. Close enough to the advertised 3.54% advertised rate.
Oh yeah. Now I see it. Thanks for the information.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by pnwkayaker »

First time poster, here.

Reporting in to say, my husband and I just bought I-bonds. Sure, the Treasury Direct website was a bit clunky, but it was manageable. No hiccups or medallion signature required.

New experience for me and I feel good about parking some cash in I-bonds, where the principal will retain it's value and I will earn a little interest.

Thanks for the education on I-bonds.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by wannabeteacher »

Welcome to the forum!
Congratulations on your hiccupless purchase
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by ApeAttack »

pnwkayaker wrote: Mon Oct 25, 2021 9:51 am First time poster, here.

Reporting in to say, my husband and I just bought I-bonds. Sure, the Treasury Direct website was a bit clunky, but it was manageable. No hiccups or medallion signature required.

New experience for me and I feel good about parking some cash in I-bonds, where the principal will retain it's value and I will earn a little interest.

Thanks for the education on I-bonds.
Welcome to the I-Bond club. :D
May all your index funds gain +0.5% today.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by grogu »

Mel Lindauer wrote: Sun Oct 24, 2021 5:51 pm
Startled Cat wrote: Sun Oct 24, 2021 4:11 pm I've always held the opinion that I Bonds aren't worth bothering with. Even if the rates suddenly became attractive, the purchase limits are too low to make them very interesting. And I've heard terrible, terrible things about TreasuryDirect.
Don't mean to single you out because I hear you and others state that since the purchase limits are too low to make them very interesting, they're not worth bothering with.

At $10,000 per SS# per year, they're actually much higher than the Traditional IRA contribution limit of either $6,000 or $7,000 (depending on age) and yet I never hear folks complain that those contribution limits are too low to bother with.

Can you (or anyone else) please explain this paradox? I just don't know what I'm missing, but am open to learning why this happens so often.
Here are some issues with the limits:

1. In addition to $6k for IRAs, you also have $19k for 401k and unlimited amounts in after-tax. So $10k is definitely a smaller limit compared to other options. Also, if you’re buying primarily stocks in IRAs and 401ks, your balance should increase much faster than if you bought bonds. Therefore, you need less of an initial investment.
2. I suspect that most of the people who want to exceed the limits are people later in their careers who are looking to downshift into a more conservative AA, i.e., convert equities into bonds. For example, if they have a $1M portfolio and are looking to go from 90/10 to 80/20 to 70/30, they can’t come close to that through I-bonds (except at $10k/person/year).
3. If you’re looking to convert a sizeable emergency fund into I-bonds (which to me is the best use of them), you can’t (except at $10k/year/person).
4. If you did accumulate a lot of I-bonds over the years and for whatever reason you need to sell them, you can’t buy them back (except at $10k/year/person).
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Re: I Bonds variable rate @ 3.54% in May

Post by Joey Jo Jo Jr »

Mel Lindauer wrote: Sun Oct 24, 2021 12:09 pm
noriskfinance wrote: Fri Apr 16, 2021 9:13 am Many thanks. This was not at all intuitive without your directions. Appreciate it.
IowaFarmWife wrote: Fri Apr 16, 2021 7:58 am
noriskfinance wrote: Fri Apr 16, 2021 7:47 am I placed an order to purchase at the end of the month in treasury direct. No way to change that not to execute this month now is it? I can see the order in my history page but no way to cancel or edit it.
I just changed mine the other day when I saw the increase. Log into TD, at the top menu go to "Manage Direct," and in the first column, under "manage securities" go to the link "view/delete pending purchase" and that will allow you to delete the pending purchase. Then, go back to Buy Direct and reenter the amount and the date that you want to make the purchase.
It's your choice, but IMO, there was no reason not to buy this month to get the 3.54% for the first six months and THEN enjoy the new 7+% for the next six months.

I'm concerned that some Bogleheads don't understand that they will still get the higher rate if they buy this month, but that they will lock in the attractive 3.54% for the first six months and then enjoy that higher rate for the next six months.
For a person that may want to hold for the one year minimum, like me, then could it make sense to start with the 7% rate so that when you closed out you wouldn’t have to forfeit any interest at the 7% rate? That’s the question I was struggling/procrastinating with, though it may be too late for me to get 3.54% anyway if TD gives me any grief with the signup.
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Re: I Bonds variable rate @ 3.54% in May

Post by iamblessed »

Mel Lindauer wrote: Tue Oct 19, 2021 12:19 am
ApeAttack wrote: Tue Oct 19, 2021 12:12 am
Noobvestor wrote: Mon Oct 18, 2021 11:27 pm
ApeAttack wrote: Tue Apr 20, 2021 5:43 pm I have a couple questions regarding paying taxes on redeemed I-Bonds. According to the Treasury Direct website, there are two options for reporting taxes:
(A) Report the interest every year on your federal income tax return
(B) Defer reporting the interest until the bond is redeemed (I prefer this method)
https://www.treasurydirect.gov/indiv/re ... nsider.htm

My questions:
(1) Will I receive the 1099-INT form only when I cash out the I-Bonds, or every year I hold the I-Bonds? This video makes it seem like I may receive a 1099-INT every year (or maybe the user redeemed I-Bonds every year).
https://www.treasurydirect.gov/indiv/to ... 20)-CC.mp4

(2) When purchasing the I-Bonds, do I need to select which option I wish to implement?


Thanks in advance for the input. I plan on making my first purchase of I-Bonds in May and want to be prepared.
I can't recall if you have to select the option manually, but I do *not* get tax forms annually (am taking the deferred-tax approach). I *guess* and someone else can confirm/deny they assume you're doing option (B)!?
Wow... a blast from the past. It was only 6 months ago that I took the plunge into the world of I-Bonds. It feels like a lifetime ago. The pandemic does weird things to the perception time.

I will find out after January if the default is to defer taxes until redemption. :D
You won't have to wait until Jan. Deferral of taxes is the default.
That is good news.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by secondopinion »

grogu wrote: Mon Oct 25, 2021 11:15 am
Mel Lindauer wrote: Sun Oct 24, 2021 5:51 pm
Startled Cat wrote: Sun Oct 24, 2021 4:11 pm I've always held the opinion that I Bonds aren't worth bothering with. Even if the rates suddenly became attractive, the purchase limits are too low to make them very interesting. And I've heard terrible, terrible things about TreasuryDirect.
Don't mean to single you out because I hear you and others state that since the purchase limits are too low to make them very interesting, they're not worth bothering with.

At $10,000 per SS# per year, they're actually much higher than the Traditional IRA contribution limit of either $6,000 or $7,000 (depending on age) and yet I never hear folks complain that those contribution limits are too low to bother with.

Can you (or anyone else) please explain this paradox? I just don't know what I'm missing, but am open to learning why this happens so often.
Here are some issues with the limits:

1. In addition to $6k for IRAs, you also have $19k for 401k and unlimited amounts in after-tax. So $10k is definitely a smaller limit compared to other options. Also, if you’re buying primarily stocks in IRAs and 401ks, your balance should increase much faster than if you bought bonds. Therefore, you need less of an initial investment.
2. I suspect that most of the people who want to exceed the limits are people later in their careers who are looking to downshift into a more conservative AA, i.e., convert equities into bonds. For example, if they have a $1M portfolio and are looking to go from 90/10 to 80/20 to 70/30, they can’t come close to that through I-bonds (except at $10k/person/year).
3. If you’re looking to convert a sizeable emergency fund into I-bonds (which to me is the best use of them), you can’t (except at $10k/year/person).
4. If you did accumulate a lot of I-bonds over the years and for whatever reason you need to sell them, you can’t buy them back (except at $10k/year/person).
Sure thing; it would take me a long time to fill up I bonds. Anyone with a lot of fixed income in a taxable account should then get started. Adding back funds after an emergency is close to impossible; so, I do not count them as a reliable source to fund such (despite how good they are in theory). However, I guess it is better than selling stocks or breaking into retirement.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by tj »

Welp, apparently I have my Ally Bank linked to TreasuryDirect. was gonna buy 10k today, but I don't keep $$ in Ally. So will transfer $10k to Ally tomorrow, hopefully it can be withdrawn before the end of the month. If not, looks like I'll get 6 months of the 7% rate and then 6 months of the mystery rate.

Also, pick your linked bank account wisely, with the paper form that you have to fill out to change a bank account...it seems like it would be a hassle.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by HueyLD »

tj wrote: Mon Oct 25, 2021 12:22 pm Welp, apparently I have my Ally Bank linked to TreasuryDirect. was gonna buy 10k today, but I don't keep $$ in Ally. So will transfer $10k to Ally tomorrow, hopefully it can be withdrawn before the end of the month. If not, looks like I'll get 6 months of the 7% rate and then 6 months of the mystery rate.

Also, pick your linked bank account wisely, with the paper form that you have to fill out to change a bank account...it seems like it would be a hassle.
Per ally.com:

“ Standard transfer between an Ally Bank and non-Ally Bank account requested before 1:00 am ET, Monday through Friday

Delivery speed: 3 business days
Funds available: 3rd business day

Next-day transfer between an Ally Bank and non-Ally Bank account requested before 7:30 pm ET, Monday through Friday

Delivery speed: 1business days
Funds available: Next business day”
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by tj »

HueyLD wrote: Mon Oct 25, 2021 12:31 pm
tj wrote: Mon Oct 25, 2021 12:22 pm Welp, apparently I have my Ally Bank linked to TreasuryDirect. was gonna buy 10k today, but I don't keep $$ in Ally. So will transfer $10k to Ally tomorrow, hopefully it can be withdrawn before the end of the month. If not, looks like I'll get 6 months of the 7% rate and then 6 months of the mystery rate.

Also, pick your linked bank account wisely, with the paper form that you have to fill out to change a bank account...it seems like it would be a hassle.
Per ally.com:

“ Standard transfer between an Ally Bank and non-Ally Bank account requested before 1:00 am ET, Monday through Friday

Delivery speed: 3 business days
Funds available: 3rd business day

Next-day transfer between an Ally Bank and non-Ally Bank account requested before 7:30 pm ET, Monday through Friday

Delivery speed: 1business days
Funds available: Next business day”
It was an ACH push from Alliant to Ally. Alliant projects funds available on 10/29. I missed the cut-off to transfer today, so it transfers tomorrow. Funds are often available before Alliant projects they will be at the other bank, though.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by tibbitts »

Startled Cat wrote: Sun Oct 24, 2021 4:18 pm
Mudpuppy wrote: Sun Oct 24, 2021 4:14 pm You have until April to buy I-Bonds at the 7% six-month rate, so I'm not sure why you think you won't have time to navigate this. If you don't want to hassle with getting the medallion signature from your bank/credit union, that's another matter entirely, and fully up to you to decide. But you do have the time.
I know there is no imminent deadline. I'm saying it doesn't seem worth the hassle.
I know the feeling, but gave in and just bought my 10k for 2021. I had promised myself when I last purchased (last time rates were .5%) I wouldn't buy at a lower rate, and in fact didn't (and now regret it) at .2%. So of course now I'm buying again at 0%.

So far I'm sticking to the $5k for the tax refund not being worth it though, mainly because of the logistics of receiving bonds or anything else in the USmail, and then relying on USmail (or an expensive more trackable service) to send them to the Treasury. I'm not sure why the IRS doesn't require anyone wanting I-bonds for refunds to have a TD account and then transfer the funds for the purchase (for one bond, obviously) electronically.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by tj »

tibbitts wrote: Mon Oct 25, 2021 1:04 pm
Startled Cat wrote: Sun Oct 24, 2021 4:18 pm
Mudpuppy wrote: Sun Oct 24, 2021 4:14 pm You have until April to buy I-Bonds at the 7% six-month rate, so I'm not sure why you think you won't have time to navigate this. If you don't want to hassle with getting the medallion signature from your bank/credit union, that's another matter entirely, and fully up to you to decide. But you do have the time.
I know there is no imminent deadline. I'm saying it doesn't seem worth the hassle.
I know the feeling, but gave in and just bought my 10k for 2021. I had promised myself when I last purchased (last time rates were .5%) I wouldn't buy at a lower rate, and in fact didn't (and now regret it) at .2%. So of course now I'm buying again at 0%.

So far I'm sticking to the $5k for the tax refund not being worth it though, mainly because of the logistics of receiving bonds or anything else in the USmail, and then relying on USmail (or an expensive more trackable service) to send them to the Treasury. I'm not sure why the IRS doesn't require anyone wanting I-bonds for refunds to have a TD account and then transfer the funds for the purchase (for one bond, obviously) electronically.
I think the only reason the tax refund option exists is for the Treasury to use up old printed bonds. I'd have to guess that when that stock is gone, the option goes away.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by tibbitts »

tj wrote: Mon Oct 25, 2021 1:07 pm I think the only reason the tax refund option exists is for the Treasury to use up old printed bonds. I'd have to guess that when that stock is gone, the option goes away.
I have no idea but would be surprised if the entire stock of printed bonds couldn't be destroyed almost instantly, along with all the used paper money that's destroyed regularly. It's not like the Treasury would gain anything by using vs. destroying unwanted bonds. In fact there are costs in distributing the bonds that wouldn't exist for distributing funds electronically.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by tj »

tibbitts wrote: Mon Oct 25, 2021 1:48 pm
tj wrote: Mon Oct 25, 2021 1:07 pm I think the only reason the tax refund option exists is for the Treasury to use up old printed bonds. I'd have to guess that when that stock is gone, the option goes away.
I have no idea but would be surprised if the entire stock of printed bonds couldn't be destroyed almost instantly, along with all the used paper money that's destroyed regularly. It's not like the Treasury would gain anything by using vs. destroying unwanted bonds. In fact there are costs in distributing the bonds that wouldn't exist for distributing funds electronically.
Then why don't just send people five $1000 bonds for the refund?
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by tibbitts »

tj wrote: Mon Oct 25, 2021 2:02 pm
tibbitts wrote: Mon Oct 25, 2021 1:48 pm
tj wrote: Mon Oct 25, 2021 1:07 pm I think the only reason the tax refund option exists is for the Treasury to use up old printed bonds. I'd have to guess that when that stock is gone, the option goes away.
I have no idea but would be surprised if the entire stock of printed bonds couldn't be destroyed almost instantly, along with all the used paper money that's destroyed regularly. It's not like the Treasury would gain anything by using vs. destroying unwanted bonds. In fact there are costs in distributing the bonds that wouldn't exist for distributing funds electronically.
Then why don't just send people five $1000 bonds for the refund?
I have no idea, but it doesn't seem likely that an agency that destroys so much paper would hesitate to add what would probably be a tiny percentage to the pile.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Mel Lindauer »

tibbitts wrote: Mon Oct 25, 2021 1:48 pm
tj wrote: Mon Oct 25, 2021 1:07 pm I think the only reason the tax refund option exists is for the Treasury to use up old printed bonds. I'd have to guess that when that stock is gone, the option goes away.
I have no idea but would be surprised if the entire stock of printed bonds couldn't be destroyed almost instantly, along with all the used paper money that's destroyed regularly. It's not like the Treasury would gain anything by using vs. destroying unwanted bonds. In fact there are costs in distributing the bonds that wouldn't exist for distributing funds electronically.
There are lots of folks who only want paper I Bonds, so they can kill two birds with one stone by using up the already-printed paper I Bonds to satisfy that demand. There's also a demand from folks who want more than the 10K per person that they can get at TD, so again, another use for them.

They could obviously be more cost efficient, though, by mailing all of the I Bonds in a single envelope, rather than each one being in a separate envelope.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by RubyTuesday »

Mel Lindauer wrote: Mon Oct 25, 2021 4:01 pm
tibbitts wrote: Mon Oct 25, 2021 1:48 pm
tj wrote: Mon Oct 25, 2021 1:07 pm I think the only reason the tax refund option exists is for the Treasury to use up old printed bonds. I'd have to guess that when that stock is gone, the option goes away.
I have no idea but would be surprised if the entire stock of printed bonds couldn't be destroyed almost instantly, along with all the used paper money that's destroyed regularly. It's not like the Treasury would gain anything by using vs. destroying unwanted bonds. In fact there are costs in distributing the bonds that wouldn't exist for distributing funds electronically.
There are lots of folks who only want paper I Bonds, so they can kill two birds with one stone by using up the already-printed paper I Bonds to satisfy that demand. There's also a demand from folks who want more than the 10K per person that they can get at TD, so again, another use for them.

They could obviously be more cost efficient, though, by mailing all of the I Bonds in a single envelope, rather than each one being in a separate envelope.
I suspect the system is automated, no humans in chain, treasury pays no postage… putting multiple in one envelope would almost certainly RAISE the cost.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by tibbitts »

Mel Lindauer wrote: Mon Oct 25, 2021 4:01 pm There's also a demand from folks who want more than the 10K per person that they can get at TD, so again, another use for them.
If they open up a "while supply lasts" increased-limit sale on whatever remaining paper I-bonds have been printed, Bogleheads alone would solve the remaining inventory problem within a couple of hours. No need to drag out and complicate the process through tax refunds.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Mel Lindauer »

tibbitts wrote: Mon Oct 25, 2021 4:19 pm
Mel Lindauer wrote: Mon Oct 25, 2021 4:01 pm There's also a demand from folks who want more than the 10K per person that they can get at TD, so again, another use for them.
If they open up a "while supply lasts" increased-limit sale on whatever remaining paper I-bonds have been printed, Bogleheads alone would solve the remaining inventory problem within a couple of hours. No need to drag out and complicate the process through tax refunds.
That's so true. They'd be gone in a heartbeat.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Grt2bOutdoors »

MP46 wrote: Sun Oct 24, 2021 3:09 pm
Grt2bOutdoors wrote: Sat Oct 23, 2021 9:47 pm
whodidntante wrote: Sat Oct 23, 2021 9:40 pm
MKP wrote: Sat Oct 23, 2021 9:38 pm
Mel Lindauer wrote: Sat Oct 23, 2021 8:21 pm

Seems like it would be a good strategy for a couple to double up when the rates are high, like now (buy the limit for themselves and the limit as a gift to their spouse) and only gift them later when the rates are low. That way, they're getting $40k at the good rate and nothing when the rates are low and they wouldn't be buying anyway.
How would my child be able to cash them out and maybe move to their UTMA at Vanguard if they don't have a checking account?
First, they need a signature guarantee. :)
No they don't. If the child is a minor, the custodian is the one making the decisions on their behalf, including liquidation of the bond. The proceeds will then be deposited in the linked bank account. The custodian can then either open the UTMA at Vanguard and/or simply transfer the proceeds into the UTMA account if already existing at Vanguard.
I just opened minor accounts for my kids through my account and put in a couple of K for each. As per the website, once they turn 18 they will be able to open their own TD account and I will be able to still have them linked but only to add more money and not to take the money out. Only risk is they can basically at 18 decide to cash all the money to go to Europe-not so bad or to buy dope-bad...
Let's say you need the money to send them on a class trip to Montreal - use the I bonds to pay for it. Or you can tell them, see this money? It's for you to go to college or trade school. You have some time to hammer it home to them.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Mel Lindauer »

tj wrote: Mon Oct 25, 2021 2:02 pm
tibbitts wrote: Mon Oct 25, 2021 1:48 pm
tj wrote: Mon Oct 25, 2021 1:07 pm I think the only reason the tax refund option exists is for the Treasury to use up old printed bonds. I'd have to guess that when that stock is gone, the option goes away.
I have no idea but would be surprised if the entire stock of printed bonds couldn't be destroyed almost instantly, along with all the used paper money that's destroyed regularly. It's not like the Treasury would gain anything by using vs. destroying unwanted bonds. In fact there are costs in distributing the bonds that wouldn't exist for distributing funds electronically.
Then why don't just send people five $1000 bonds for the refund?
If they did that, they'd never get rid of the smaller denomination I Bonds.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by SnowBog »

Mel Lindauer wrote: Mon Oct 25, 2021 11:48 pm
tj wrote: Mon Oct 25, 2021 2:02 pm
tibbitts wrote: Mon Oct 25, 2021 1:48 pm
tj wrote: Mon Oct 25, 2021 1:07 pm I think the only reason the tax refund option exists is for the Treasury to use up old printed bonds. I'd have to guess that when that stock is gone, the option goes away.
I have no idea but would be surprised if the entire stock of printed bonds couldn't be destroyed almost instantly, along with all the used paper money that's destroyed regularly. It's not like the Treasury would gain anything by using vs. destroying unwanted bonds. In fact there are costs in distributing the bonds that wouldn't exist for distributing funds electronically.
Then why don't just send people five $1000 bonds for the refund?
If they did that, they'd never get rid of the smaller denomination I Bonds.
And if it's automated, by using up the lower denominations they can scale up from $25 - $5000 refunds following the same process.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by pasadena »

tj wrote: Mon Oct 25, 2021 12:44 pm
HueyLD wrote: Mon Oct 25, 2021 12:31 pm
tj wrote: Mon Oct 25, 2021 12:22 pm Welp, apparently I have my Ally Bank linked to TreasuryDirect. was gonna buy 10k today, but I don't keep $$ in Ally. So will transfer $10k to Ally tomorrow, hopefully it can be withdrawn before the end of the month. If not, looks like I'll get 6 months of the 7% rate and then 6 months of the mystery rate.

Also, pick your linked bank account wisely, with the paper form that you have to fill out to change a bank account...it seems like it would be a hassle.
Per ally.com:

“ Standard transfer between an Ally Bank and non-Ally Bank account requested before 1:00 am ET, Monday through Friday

Delivery speed: 3 business days
Funds available: 3rd business day

Next-day transfer between an Ally Bank and non-Ally Bank account requested before 7:30 pm ET, Monday through Friday

Delivery speed: 1business days
Funds available: Next business day”
It was an ACH push from Alliant to Ally. Alliant projects funds available on 10/29. I missed the cut-off to transfer today, so it transfers tomorrow. Funds are often available before Alliant projects they will be at the other bank, though.
I bought i-bonds on 07/29. The funds were debited at Ally on July 30th, but the transaction at TD is dated 07/29. If you buy on Friday, you're good.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Startled Cat »

Mel Lindauer wrote: Sun Oct 24, 2021 5:51 pm Don't mean to single you out because I hear you and others state that since the purchase limits are too low to make them very interesting, they're not worth bothering with.

At $10,000 per SS# per year, they're actually much higher than the Traditional IRA contribution limit of either $6,000 or $7,000 (depending on age) and yet I never hear folks complain that those contribution limits are too low to bother with.

Can you (or anyone else) please explain this paradox? I just don't know what I'm missing, but am open to learning why this happens so often.
That's an interesting comparison. I can think of two reasons why I think of IRAs differently from I Bonds:

1. I started contributing to a Roth IRA very early in my career, when the maximum contribution was more meaningful for me. There is very little marginal increase in complexity from making an annual backdoor Roth contribution now that I already have the account in place. I Bonds would be something new for me.

2. I intend to delay withdrawals from my Roth IRA as long as possible. It is an account I'll hold onto for the long term. Conversely, I am not interested in holding on to bonds for the long run. This would be an opportunistic purchase, and I would probably redeem the bond once the variable rate falls back to something boring. In other words, the hassles involved in setting up a TreasuryDirect account are going to be amortized over a year or so, not decades.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Gnomon »

Here's another I-Bond scenario I haven't seen mentioned, and is the reason I just bought I-Bonds for the first time and plan to buy $10k each year hereafter. I'm considering/planning to retire next year at 61, and begin my SS benefit at 67 (or maybe later). If I take SS at 67, my inflation-indexed SS benefit combined with $10k in annually redeemed I-Bonds (which will be at least 5 years old at that point) will cover my expected expenses at 67 and that full amount will be inflation-indexed through death. So it's sort of an I-Bond ladder to supplement SS. Not expecting and don't need to make any (inflation premium) money off the I-Bonds. Just using them for their inflation protection of retirement expenses (an SS booster).

It's probably not a scenario applicable to a lot of people, but I can't be the only one.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by SnowBog »

Startled Cat wrote: Tue Oct 26, 2021 12:06 am
Mel Lindauer wrote: Sun Oct 24, 2021 5:51 pm Don't mean to single you out because I hear you and others state that since the purchase limits are too low to make them very interesting, they're not worth bothering with.

At $10,000 per SS# per year, they're actually much higher than the Traditional IRA contribution limit of either $6,000 or $7,000 (depending on age) and yet I never hear folks complain that those contribution limits are too low to bother with.

Can you (or anyone else) please explain this paradox? I just don't know what I'm missing, but am open to learning why this happens so often.
That's an interesting comparison. I can think of two reasons why I think of IRAs differently from I Bonds:

1. I started contributing to a Roth IRA very early in my career, when the maximum contribution was more meaningful for me. There is very little marginal increase in complexity from making an annual backdoor Roth contribution now that I already have the account in place. I Bonds would be something new for me.

2. I intend to delay withdrawals from my Roth IRA as long as possible. It is an account I'll hold onto for the long term. Conversely, I am not interested in holding on to bonds for the long run. This would be an opportunistic purchase, and I would probably redeem the bond once the variable rate falls back to something boring. In other words, the hassles involved in setting up a TreasuryDirect account are going to be amortized over a year or so, not decades.
For most people, the "hassle" is about 15 minutes to create a new TD account and purchase bonds. (There are exceptions...)

And for many, the purchase limit - in the context of new annual contributions - is still a meaningful amount (especially if doing self + spouse and/or optional living trusts/etc.).

Sadly these two are often cited as reasons people avoid I Bonds, even though they could be beneficial to their situations. Have to look past the superficial...
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by investor2018 »

We just purchased $20k I-bonds first time ever. Thanks for the info on this thread!! We will be buying this much every year going forward.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by tibbitts »

Mel Lindauer wrote: Sun Oct 24, 2021 5:51 pm Can you (or anyone else) please explain this paradox? I just don't know what I'm missing, but am open to learning why this happens so often.
My theory is that it's because the IRA contributions limits have grown over time, which the I-bond limits (not to mention purchase terms) have become much more restrictive.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Shorty »

Regarding limits, this makes a lot of sense for midcareer Med to high earners already maximizing tax sheltered and contributing taxable, especially in the 35-50 age range leading to SS. Combine with an EE ladder and pretty solid contributions are possible. I feel many here have been blessed and spoiled by the prolonged bull market.

Also, great for building a tiered EF at any age.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by mary1492 »

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

Post by Da5id »

mary1492 wrote: Tue Oct 26, 2021 3:07 am
Mel Lindauer wrote: Sun Oct 24, 2021 5:51 pm
Startled Cat wrote: Sun Oct 24, 2021 4:11 pm I've always held the opinion that I Bonds aren't worth bothering with. Even if the rates suddenly became attractive, the purchase limits are too low to make them very interesting. And I've heard terrible, terrible things about TreasuryDirect.
Don't mean to single you out because I hear you and others state that since the purchase limits are too low to make them very interesting, they're not worth bothering with.

At $10,000 per SS# per year, they're actually much higher than the Traditional IRA contribution limit of either $6,000 or $7,000 (depending on age) and yet I never hear folks complain that those contribution limits are too low to bother with.

Can you (or anyone else) please explain this paradox? I just don't know what I'm missing, but am open to learning why this happens so often.
I believe some folks are simply not rational. I got into a debate, which bordered on becoming an argument with someone on another site who took that position...$10,000/$20,000 was too small for his enormous portfolio (and ego).

The debate first began with the May reset to 3.54% as I suggested others seriously consider redirecting some fixed income they had sitting in "high yield" savings accounts, maturing CDs, or MM accounts. The objector continued for a few months. When I went back to update the thread pointing out the November reset being over 7%, the objector all of a sudden has a different tune. Now he has a mental block about his prior comments. Par for the course these days.
While I agree I-bonds are clearly better than the comparable alternatives, I think not getting them may well make sense. Were I older (say moderately into my retirement) I'd think the argument against adding another investment that wouldn't materially change my prospects would be reasonable enough. Treasury Direct isn't the most friendly site in the world. e.g. looking at my parents technical skills as they aged they'd not have wanted to deal with the website and, given the lack of communications/statements from Treasury Direct, could have forgotten that they had the bonds entirely.

I sold all my I-bonds last year (to take advantage of the educational exclusion and pay for college for kids). Alas given the current rates. And selling lots of individual bonds certainly makes Treasury Direct's clunky nature stand out. But I bought back more this year and will get another 5K as my tax refund. I like them for a bunch of the usual reasons (safe, good rate, tax deferred, state tax free, liquid after a year, etc). But I don't think people who don't choose to add them to their portfolio should be mocked or are necessarily irrational.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by mary1492 »

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

Post by Da5id »

mary1492 wrote: Tue Oct 26, 2021 8:10 am
Da5id wrote: Tue Oct 26, 2021 7:59 am But I don't think people who don't choose to add them to their portfolio should be mocked or are necessarily irrational.
When the reason is what we were discussing, that the $10,000/$20,000 max is too low for them, I believe it is irrational. Of course, I Bonds are not for everyone in every circumstance.

However, when the ONLY objection is the $10,000/$20,000 annual limit, it is irrational.
I believe there is an amount of total assets/bond holdings one can have where the positive outcomes of buying I-bonds are just lost in the noise. If you'd agree that is the case for someone with say $100M, the only question is exactly what that amount is. Certainly for me that isn't the case, the 10K limit is comparable to other things (HSA still, 401K+Roth when I was working) that I find useful.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by mary1492 »

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

Post by HueyLD »

$10k/year is a struggle for a low net worth person like me and I am glad that Uncle Sam provides such a wonderful investment opportunity for a poor person like myself.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by mikejuss »

Is the general sense that iBonds are going to outperform VBTLX over the next few decades? I'm hesitant to add complexity to my basic 3-fund portfolio. Are others of this frame of mind?
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Da5id »

mikejuss wrote: Tue Oct 26, 2021 8:35 am Is the general sense that iBonds are going to outperform VBTLX over the next few decades? I'm hesitant to add complexity to my basic 3-fund portfolio. Are others of this frame of mind?
I don't think that is the general sense for the next few decades. Today's 0 fixed rate i-bonds will return 0 percent real at best (less any taxes you may pay). While nominal bonds maybe don't look great in the short term I think many of us hope total bond will have a modest positive real return over the long haul.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Nowizard »

Interesting since we are in the process of converting our paper IBonds to electronic and selling. Our only "bank" account is at a CU that doesn't cash IBonds, and it is my understanding that without an account, other banks are either not cashing IBonds or limiting cashing to $1,000 per transaction for "documentary" cashing rather than jumping through hoops and providing other information. TD site unfriendly. In short, getting rid of IBonds from 2003 will simplify our portfolio, and the purchase issues are not worth it for us in the future. Issues are though not related to amounts allowed, just not feeling the added portfolio complexity is worth it, particularly if heirs ever had to cash them out.

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

Post by grogu »

mary1492 wrote: Tue Oct 26, 2021 8:29 am
Da5id wrote: Tue Oct 26, 2021 8:21 am
mary1492 wrote: Tue Oct 26, 2021 8:10 am
Da5id wrote: Tue Oct 26, 2021 7:59 am But I don't think people who don't choose to add them to their portfolio should be mocked or are necessarily irrational.
When the reason is what we were discussing, that the $10,000/$20,000 max is too low for them, I believe it is irrational. Of course, I Bonds are not for everyone in every circumstance.

However, when the ONLY objection is the $10,000/$20,000 annual limit, it is irrational.
I believe there is an amount of total assets/bond holdings one can have where the positive outcomes of buying I-bonds are just lost in the noise. If you'd agree that is the case for someone with say $100M, the only question is exactly what that amount is. Certainly for me that isn't the case, the 10K limit is comparable to other things (HSA still, 401K+Roth when I was working) that I find useful.
Of course at $100M it's a completely different issue. But that's not what we're talking about. We're talking about average folks on this site and other similar ones. Yes, they are financially above average. However, nowhere near the numbers that would make it not worth the effort.
For a more modest but slightly "above average" portfolio of $5M, $10k represents 0.2% of the total. One can consider that noise. Even an "average" portfolio of say $1M, $10k is only 1%. Yes, you can buy them for a number of years, but as I said upthread (along with some additional reasons), for people who want to quickly convert a large equity position into bonds, the $10k limit is a significant obstacle.

The real paradox with I-bonds is that, during your prime earning years, I would argue you shouldn't be buying hardly any (except for an emergency fund); you should be buying equities for the long-haul. So the $10k limit doesn't come into play. But later in your career, when the time is right to be converting to a more conservative portfolio, the limits stop you from doing that. Yes you may be able to do it gradually over a number of years, and some may be better than nothing, but the limit can be a deterrent.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by z3r0c00l »

I think a person with $5 million would still find $100,000 for a single person, $200,000 for a couple quite useful as they are already likely to be short on tax reduced/deferred space. Yes that takes 10 years to build but I presume the $5 million took a while to accumulate also.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by mikejuss »

Da5id wrote: Tue Oct 26, 2021 8:45 am
mikejuss wrote: Tue Oct 26, 2021 8:35 am Is the general sense that iBonds are going to outperform VBTLX over the next few decades? I'm hesitant to add complexity to my basic 3-fund portfolio. Are others of this frame of mind?
I don't think that is the general sense for the next few decades. Today's 0 fixed rate i-bonds will return 0 percent real at best (less any taxes you may pay). While nominal bonds maybe don't look great in the short term I think many of us hope total bond will have a modest positive real return over the long haul.
Thanks. But when the current inflationary environment shrinks--as I hope it will soon--won't iBonds look a lot less attractive? There's much talk on this forum about staying the course through thick and thin, but it seems like many here are falling for a product that at the moment is, admittedly, attractive but that isn't going to move the needle for those of us who are a while from retirement.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Da5id »

mikejuss wrote: Tue Oct 26, 2021 9:01 am
Da5id wrote: Tue Oct 26, 2021 8:45 am
mikejuss wrote: Tue Oct 26, 2021 8:35 am Is the general sense that iBonds are going to outperform VBTLX over the next few decades? I'm hesitant to add complexity to my basic 3-fund portfolio. Are others of this frame of mind?
I don't think that is the general sense for the next few decades. Today's 0 fixed rate i-bonds will return 0 percent real at best (less any taxes you may pay). While nominal bonds maybe don't look great in the short term I think many of us hope total bond will have a modest positive real return over the long haul.
Thanks. But when the current inflationary environment shrinks--as I hope it will soon--won't iBonds look a lot less attractive? There's much talk on this forum about staying the course through thick and thin, but it seems like many here are falling for a product that at the moment is, admittedly, attractive but isn't going to move the needle for those who are a while from retirement.
I don't know when current inflation will end or the course it will take. i-bonds (and TIPs) make sense to me, they are not in place of my nominal bonds but in addition to them. i-bonds have multiple positive features that I like. State tax free, federal tax deferred (expanding my tax-deferred space I can use for bonds), providing some mitigation for higher than expected inflation, etc. And i-bonds can be tax free -- I used some to pay for kids college last year.

If i-bonds aren't working out well for you (assuming you've held for a year) you can always sell them. At the current rates i-bonds clearly look good to me though.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Da5id »

Nowizard wrote: Tue Oct 26, 2021 8:53 am Interesting since we are in the process of converting our paper IBonds to electronic and selling. Our only "bank" account is at a CU that doesn't cash IBonds, and it is my understanding that without an account, other banks are either not cashing IBonds or limiting cashing to $1,000 per transaction for "documentary" cashing rather than jumping through hoops and providing other information. TD site unfriendly. In short, getting rid of IBonds from 2003 will simplify our portfolio, and the purchase issues are not worth it for us in the future. Issues are though not related to amounts allowed, just not feeling the added portfolio complexity is worth it, particularly if heirs ever had to cash them out.
While we each do what we think is best, selling I-bonds that will be paying over 8% annual rate (2003 bonds have ~1% fixed) over the next 6 months seems like bad timing to me. They are vastly better than any comparable alternative. That said, I do understand the hassle/complexity argument. Shame they can't be sold to others, 1% real i-bonds are just a dream to those of us who started buying i-bonds more recently.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by grogu »

z3r0c00l wrote: Tue Oct 26, 2021 8:58 am I think a person with $5 million would still find $100,000 for a single person, $200,000 for a couple quite useful as they are already likely to be short on tax reduced/deferred space. Yes that takes 10 years to build but I presume the $5 million took a while to accumulate also.
Absolutely they could, and as I said, some may be better than nothing. But the person with a $5M portfolio may be 50 or 60 years old and ready to retire. He may want to go quickly from 90% equities to 70% or 60%. Even by maxing out $10k for 10 years, that only gets him from 10% to 12% bonds. Barely moving the needle--over 10 years.

Of course he can still buy other bond funds to change his desired asset allocation faster and I-bonds need be only one component of that move. Note also that if the bulk of that $5M is in a 401k/IRA, he wouldn't even have to trigger any taxable events to buy total bond; if he wants to buy I-bonds, he would.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by SnowBog »

mary1492 wrote: Tue Oct 26, 2021 8:10 am
Da5id wrote: Tue Oct 26, 2021 7:59 am But I don't think people who don't choose to add them to their portfolio should be mocked or are necessarily irrational.
When the reason is what we were discussing, that the $10,000/$20,000 max is too low for them, I believe it is irrational. Of course, I Bonds are not for everyone in every circumstance.

However, when the ONLY objection is the $10,000/$20,000 annual limit, it is irrational.
Likewise if it's a "fear" over the TD website, I'd call that irrational as well.

But I won't fault someone who simply values simplification and doesn't want to add another account/investment. At some point, I expect to do the same as I'd like to consolidate most accounts before I leave them to spouse/heirs. So as much as I like Savings Bonds, I feel like at some point I'll quit buying them (or maybe will do so only from a single account)...
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by mikejuss »

Da5id wrote: Tue Oct 26, 2021 9:05 am
mikejuss wrote: Tue Oct 26, 2021 9:01 am
Da5id wrote: Tue Oct 26, 2021 8:45 am
mikejuss wrote: Tue Oct 26, 2021 8:35 am Is the general sense that iBonds are going to outperform VBTLX over the next few decades? I'm hesitant to add complexity to my basic 3-fund portfolio. Are others of this frame of mind?
I don't think that is the general sense for the next few decades. Today's 0 fixed rate i-bonds will return 0 percent real at best (less any taxes you may pay). While nominal bonds maybe don't look great in the short term I think many of us hope total bond will have a modest positive real return over the long haul.
Thanks. But when the current inflationary environment shrinks--as I hope it will soon--won't iBonds look a lot less attractive? There's much talk on this forum about staying the course through thick and thin, but it seems like many here are falling for a product that at the moment is, admittedly, attractive but isn't going to move the needle for those who are a while from retirement.
I don't know when current inflation will end or the course it will take. i-bonds (and TIPs) make sense to me, they are not in place of my nominal bonds but in addition to them. i-bonds have multiple positive features that I like. State tax free, federal tax deferred (expanding my tax-deferred space I can use for bonds), providing some mitigation for higher than expected inflation, etc. And i-bonds can be tax free -- I used some to pay for kids college last year.

If i-bonds aren't working out well for you (assuming you've held for a year) you can always sell them. At the current rates i-bonds clearly look good to me though.
Fair enough. Though the iBonds debate raises a larger issue: returns on equities are currently stellar, and so people are fixating on the drag that bonds are bringing to their portfolios. They want to have it both ways: excellent returns on equities and bonds at the same time. Can't we all just enjoy our double-digit returns on equities? My fear is that the relentless pursuit of optimization will make very little difference in the long run (though I enjoy threads like this one as much as the next person).
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Whakamole »

mikejuss wrote: Tue Oct 26, 2021 9:01 am Thanks. But when the current inflationary environment shrinks--as I hope it will soon--won't iBonds look a lot less attractive? There's much talk on this forum about staying the course through thick and thin, but it seems like many here are falling for a product that at the moment is, admittedly, attractive but that isn't going to move the needle for those of us who are a while from retirement.
That shrinking may not happen for some time. In the meantime, I-bonds are guaranteed to keep up with inflation.

When looking at the return of Total Bond over the past few decades, remember that includes the lowering of interest rates which helps the price of the existing bond holdings. That means a higher share price, though yield will eventually drop.

If you think "bonds help you sleep well" then I-bonds (and TIPS) are superior. No, they won't make you money, but they aren't losing several percentage points a year to inflation, either.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Da5id »

Whakamole wrote: Tue Oct 26, 2021 11:00 am
mikejuss wrote: Tue Oct 26, 2021 9:01 am Thanks. But when the current inflationary environment shrinks--as I hope it will soon--won't iBonds look a lot less attractive? There's much talk on this forum about staying the course through thick and thin, but it seems like many here are falling for a product that at the moment is, admittedly, attractive but that isn't going to move the needle for those of us who are a while from retirement.
That shrinking may not happen for some time. In the meantime, I-bonds are guaranteed to keep up with inflation.

When looking at the return of Total Bond over the past few decades, remember that includes the lowering of interest rates which helps the price of the existing bond holdings. That means a higher share price, though yield will eventually drop.

If you think "bonds help you sleep well" then I-bonds (and TIPS) are superior. No, they won't make you money, but they aren't losing several percentage points a year to inflation, either.
I own TIPS and I-bonds (about 1/3 of my bond holdings). But your "superior" implies that 100% TIPS or I-bonds is a always better choice. With current year's inflation spike I-bonds are very likely a short term winner. TIPS vs nominal treasuries longer term is far less clear. TIPS are more volatile than nominals historically (does that help you sleep well at night?). And I assume their goodness is at least mostly priced in with the negative yield TIPS have.
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