I Bonds Mega Thread (I Bond Heads Rejoice!)
Re: I Bonds variable rate @ 3.54% in May
Is there a way to buy something similar in Europe?
- anon_investor
- Posts: 15122
- Joined: Mon Jun 03, 2019 1:43 pm
-
- Posts: 61
- Joined: Sat Mar 13, 2021 10:19 am
Re: I Bonds variable rate @ 3.54% in May
I have been buying for many years and will enjoy that 7+ % combined rate. Bought, i think, $30,000 per year at those higher rates with a credit card that I paid off at end of month and received 1% cash back from credit card! Wish we could do that again.
Re: I Bonds variable rate @ 3.54% in May
I'm a year and a half from retirement, but that isn't why I purchased them. We had a CD mature that was paying 3+% and couldn't find that rate in another "safe" place for holding part of the emergency fund that we wouldn't need right away. It was at about 1.68% when I purchased the IBond.Makaveli wrote: ↑Fri Apr 16, 2021 6:30 amAnd which category do you fall into?
More so interested if this makes sense for someone in their 30’s.
I still keep my total bond fund at it's original AA within my other retirement accounts.
Re: I Bonds variable rate @ 3.54% in May
Makes sense. The more I thought about it, for someone that's fortunate with 25x expenses, the stress around getting I Bonds for 10k per year isn't worth the headache. Plan to stay the course with TBM.cork wrote: ↑Fri Apr 16, 2021 2:15 pmI'm a year and a half from retirement, but that isn't why I purchased them. We had a CD mature that was paying 3+% and couldn't find that rate in another "safe" place for holding part of the emergency fund that we wouldn't need right away. It was at about 1.68% when I purchased the IBond.Makaveli wrote: ↑Fri Apr 16, 2021 6:30 amAnd which category do you fall into?
More so interested if this makes sense for someone in their 30’s.
I still keep my total bond fund at it's original AA within my other retirement accounts.
Re: I Bonds variable rate @ 3.54% in May
The “high” inflation rate is a mathematical fluke caused by the timing of the big dip caused by the start of the pandemic and the April reporting date of the rate for May I-bonds. You’re basically getting the effects of “catch up” inflation for 6 months.
Re: I Bonds variable rate @ 3.54% in May
Realizing a lot can happen in 6 months, does this suggest that the variable rate is likely to revert to something more in line with what we've been seeing in recent years? And if someone is going to buy at some point this year, it might be good to buy on 5/1 and take advantage of 6 months of a higher rate?
Re: I Bonds variable rate @ 3.54% in May
You don't need to buy on 5/1 to get this rate. All bonds purchased prior to 5/1 can get this rate for 6 months. Also all bonds purchased up to 10/31/2021 will get this rate for 6 months.
- anon_investor
- Posts: 15122
- Joined: Mon Jun 03, 2019 1:43 pm
Re: I Bonds variable rate @ 3.54% in May
A better question is whether to buy before May 1 to also lock in 6 months at 1.68% then 6 months at 3.54%.grogu wrote: ↑Sat Apr 17, 2021 7:52 amRealizing a lot can happen in 6 months, does this suggest that the variable rate is likely to revert to something more in line with what we've been seeing in recent years? And if someone is going to buy at some point this year, it might be good to buy on 5/1 and take advantage of 6 months of a higher rate?
-
- Posts: 1511
- Joined: Tue Nov 12, 2019 9:59 am
Re: I Bonds variable rate @ 3.54% in May
I think this may be the latest:grogu wrote: ↑Sat Apr 17, 2021 7:52 amRealizing a lot can happen in 6 months, does this suggest that the variable rate is likely to revert to something more in line with what we've been seeing in recent years? And if someone is going to buy at some point this year, it might be good to buy on 5/1 and take advantage of 6 months of a higher rate?
"The Fed... forecast that headline inflation would rise to 2.4% rate this year — above the 2% target — but then settle down to 2.1% by 2023."
https://www.google.com/amp/s/www.market ... 1617820245
CPI-U historically runs a bit higher than PCE. So the Fed is forecasting a higher rate later this year than the current I bond rate, yet also less than 3.5%. How close inflation ends up relative to their forecast is anyone's guess.
I think all savings bonds issued in a month are credited as being owned for the month. My understanding is that savings bonds are issued the next business day after the purchase day. I think you just need to purchase with at least one business day remaining after your purchase day for them to be issued the same month. I'm not sure if the exact terms are listed on their website somewhere. I've previously purchased with at least two business days remaining in the month I wanted.
45% US Indexes, 25% Ex-US Indexes, 30% Fixed Income - Buy & Hold
Re: I Bonds variable rate @ 3.54% in May
You are fortunate indeed! Stay the courseMakaveli wrote: ↑Fri Apr 16, 2021 5:50 pmMakes sense. The more I thought about it, for someone that's fortunate with 25x expenses, the stress around getting I Bonds for 10k per year isn't worth the headache. Plan to stay the course with TBM.cork wrote: ↑Fri Apr 16, 2021 2:15 pmI'm a year and a half from retirement, but that isn't why I purchased them. We had a CD mature that was paying 3+% and couldn't find that rate in another "safe" place for holding part of the emergency fund that we wouldn't need right away. It was at about 1.68% when I purchased the IBond.Makaveli wrote: ↑Fri Apr 16, 2021 6:30 amAnd which category do you fall into?
More so interested if this makes sense for someone in their 30’s.
I still keep my total bond fund at it's original AA within my other retirement accounts.
-
- Posts: 241
- Joined: Tue Jan 26, 2021 5:42 am
Re: I Bonds variable rate @ 3.54% in May
So if i bought today, I’d have 6 mos 1.68, followed by 6 mos 3.54? Then next April do I start the rate that was set on 11/1 of the previous year?
Does it just constantly run a few months behind?
Re: I Bonds variable rate @ 3.54% in May
In short yes.SuperTrooper87 wrote: ↑Mon Apr 19, 2021 2:00 pmSo if i bought today, I’d have 6 mos 1.68, followed by 6 mos 3.54? Then next April do I start the rate that was set on 11/1 of the previous year?
Does it just constantly run a few months behind?
Personally, I would wait till may just because I am betting the rate after 3.54 will be higher than 1.68.
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939
Re: I Bonds variable rate @ 3.54% in May
changes on months based on the issue month of the bond. See the, When does my bond change rates? table on this page:SuperTrooper87 wrote: ↑Mon Apr 19, 2021 2:00 pmSo if i bought today, I’d have 6 mos 1.68, followed by 6 mos 3.54? Then next April do I start the rate that was set on 11/1 of the previous year?
Does it just constantly run a few months behind?
https://www.treasurydirect.gov/indiv/re ... dterms.htm
-
- Posts: 241
- Joined: Tue Jan 26, 2021 5:42 am
Re: I Bonds variable rate @ 3.54% in May
Wouldn’t buying now lock me in for a decent 1.68 and then whatever comes next? 6 mos 1.68, then 6 mos 3.54, then 6 mos starting April 2022 of whatever is coming after the 3.54? I’m in no rush. What if the next rate after 3.54 is less than 1.68? Even it’s still higher, I’ll still get it. Not looking to use this even after 12 mosray.james wrote: ↑Mon Apr 19, 2021 2:03 pmIn short yes.SuperTrooper87 wrote: ↑Mon Apr 19, 2021 2:00 pmSo if i bought today, I’d have 6 mos 1.68, followed by 6 mos 3.54? Then next April do I start the rate that was set on 11/1 of the previous year?
Does it just constantly run a few months behind?
Personally, I would wait till may just because I am betting the rate after 3.54 will be higher than 1.68.
Re: I Bonds variable rate @ 3.54% in May
For a long term holding it does not matter. If this is part of emergency fund/planning to pull money out after 1 year, I would take the May purchase. As I said it was a bet that the rate after 3.54 will be higher than 1.68. ( the bet would also mean interest lost in 10 days -April will be recovered and more due to higher rate.)SuperTrooper87 wrote: ↑Mon Apr 19, 2021 6:43 pmWouldn’t buying now lock me in for a decent 1.68 and then whatever comes next? 6 mos 1.68, then 6 mos 3.54, then 6 mos starting April 2022 of whatever is coming after the 3.54? I’m in no rush. What if the next rate after 3.54 is less than 1.68? Even it’s still higher, I’ll still get it. Not looking to use this even after 12 mos
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939
Re: I Bonds variable rate @ 3.54% in May
I'd buy now too. The 1.68 presently exceeds the current 5 yr TIPS rate by 3.39%. That's hard to beat these days, except of course, by waiting until May. But I'm just saying that with 1.68% you're netting an awesome return for now and in 6 months the I Bond rate jumps to 3.54. We don't know what the TIPS rate will be then, but I'd spend 6 months at 1.68 first, knowing what's already in the pipeline. I'd have to be #Cruncher though to be able to quantify/prove that my hunch is a better choice than waiting until May. And it's not a critical decision either way in the grand scheme of things.SuperTrooper87 wrote: ↑Mon Apr 19, 2021 6:43 pmWouldn’t buying now lock me in for a decent 1.68 and then whatever comes next? 6 mos 1.68, then 6 mos 3.54, then 6 mos starting April 2022 of whatever is coming after the 3.54? I’m in no rush. What if the next rate after 3.54 is less than 1.68? Even it’s still higher, I’ll still get it. Not looking to use this even after 12 mosray.james wrote: ↑Mon Apr 19, 2021 2:03 pmIn short yes.SuperTrooper87 wrote: ↑Mon Apr 19, 2021 2:00 pmSo if i bought today, I’d have 6 mos 1.68, followed by 6 mos 3.54? Then next April do I start the rate that was set on 11/1 of the previous year?
Does it just constantly run a few months behind?
Personally, I would wait till may just because I am betting the rate after 3.54 will be higher than 1.68.
EDIT - Please see #Cruncher's response below:
https://www.bogleheads.org/forum/viewtopic.php?p=5957030#p5957030
Last edited by Angst on Tue Apr 20, 2021 8:39 am, edited 2 times in total.
-
- Posts: 15363
- Joined: Fri Apr 10, 2015 12:29 am
Re: I Bonds variable rate @ 3.54% in May
My opinion is that it makes sense if you have assets in a taxable account that you want invested in fixed income. If you are holding stock in a 401K and i-bonds, your after-tax return is likely to be higher holding a stock index fund in the taxable space and bonds in the tax-qualified account.
- zaboomafoozarg
- Posts: 2431
- Joined: Sun Jun 12, 2011 12:34 pm
-
- Posts: 1446
- Joined: Wed Apr 17, 2013 12:05 pm
Re: I Bonds variable rate @ 3.54% in May
It's really unfortunate. We are kind of in a bubble here and I-Bonds are an awesome fixed income instrument. We are in the process of converting our entire e-fund into them and I'll be making the next purchase in May.zaboomafoozarg wrote: ↑Mon Apr 19, 2021 11:07 pmI bet a very small % of Americans know what I Bonds are, and an even smaller percent would be willing and able to buy them.
- Darth Xanadu
- Posts: 1108
- Joined: Sat Jan 27, 2018 12:47 am
- Location: MA
Re: I Bonds variable rate @ 3.54% in May
This is what my IPS says about my IBond holdings, specifically "why I invest in IBonds". I concur that it's a slight aggravation to go through the process of building a meaningful pile.Makaveli wrote: ↑Fri Apr 16, 2021 5:50 pmMakes sense. The more I thought about it, for someone that's fortunate with 25x expenses, the stress around getting I Bonds for 10k per year isn't worth the headache. Plan to stay the course with TBM.cork wrote: ↑Fri Apr 16, 2021 2:15 pmI'm a year and a half from retirement, but that isn't why I purchased them. We had a CD mature that was paying 3+% and couldn't find that rate in another "safe" place for holding part of the emergency fund that we wouldn't need right away. It was at about 1.68% when I purchased the IBond.Makaveli wrote: ↑Fri Apr 16, 2021 6:30 amAnd which category do you fall into?
More so interested if this makes sense for someone in their 30’s.
I still keep my total bond fund at it's original AA within my other retirement accounts.
Federal tax deferral (or tax-free if used for qualified education expenses), state tax exempt.
Designed to at least keep pace with inflation while also protect against deflation.
High liquidity and flexible maturity after 1-year lock up period.
Investment will serve 1 or more of the following 3 functions:
1. Emergency Fund
2. Potentially tax-free education expenses for the kids
3. Help bridge gap between retirement and claiming Social Security
-
- Posts: 15363
- Joined: Fri Apr 10, 2015 12:29 am
Re: I Bonds variable rate @ 3.54% in May
I guess I would add that if you live in a state with income taxes, you would have to estimate after-tax expected returns to see if the above claim were true, as i-bonds are state-tax-free.Northern Flicker wrote: ↑Mon Apr 19, 2021 10:20 pmMy opinion is that it makes sense if you have assets in a taxable account that you want invested in fixed income. If you are holding stock in a 401K and i-bonds, your after-tax return is likely to be higher holding a stock index fund in the taxable space and bonds in the tax-qualified account.
Re: I Bonds variable rate @ 3.54% in May
Bookmarked. I’ve been looking for something like this for awhile now. I’ll be back in May…Darth Xanadu wrote: ↑Mon Apr 19, 2021 11:35 pmThis is what my IPS says about my IBond holdings, specifically "why I invest in IBonds". I concur that it's a slight aggravation to go through the process of building a meaningful pile.Makaveli wrote: ↑Fri Apr 16, 2021 5:50 pmMakes sense. The more I thought about it, for someone that's fortunate with 25x expenses, the stress around getting I Bonds for 10k per year isn't worth the headache. Plan to stay the course with TBM.cork wrote: ↑Fri Apr 16, 2021 2:15 pmI'm a year and a half from retirement, but that isn't why I purchased them. We had a CD mature that was paying 3+% and couldn't find that rate in another "safe" place for holding part of the emergency fund that we wouldn't need right away. It was at about 1.68% when I purchased the IBond.
I still keep my total bond fund at it's original AA within my other retirement accounts.
Federal tax deferral (or tax-free if used for qualified education expenses), state tax exempt.
Designed to at least keep pace with inflation while also protect against deflation.
High liquidity and flexible maturity after 1-year lock up period.
Investment will serve 1 or more of the following 3 functions:
1. Emergency Fund
2. Potentially tax-free education expenses for the kids
3. Help bridge gap between retirement and claiming Social Security
Re: I Bonds variable rate @ 3.54% in May
1 of 9 states that do no have an income tax, so we're good on this front.Northern Flicker wrote: ↑Tue Apr 20, 2021 1:15 amI guess I would add that if you live in a state with income taxes, you would have to estimate after-tax expected returns to see if the above claim were true, as i-bonds are state-tax-free.Northern Flicker wrote: ↑Mon Apr 19, 2021 10:20 pmMy opinion is that it makes sense if you have assets in a taxable account that you want invested in fixed income. If you are holding stock in a 401K and i-bonds, your after-tax return is likely to be higher holding a stock index fund in the taxable space and bonds in the tax-qualified account.
- SmileyFace
- Posts: 9184
- Joined: Wed Feb 19, 2014 9:11 am
Re: I Bonds variable rate @ 3.54% in May
Above is essentially my list as well.bluerafters wrote: ↑Tue Apr 20, 2021 1:35 amBookmarked. I’ve been looking for something like this for awhile now. I’ll be back in May…Darth Xanadu wrote: ↑Mon Apr 19, 2021 11:35 pmThis is what my IPS says about my IBond holdings, specifically "why I invest in IBonds". I concur that it's a slight aggravation to go through the process of building a meaningful pile.Makaveli wrote: ↑Fri Apr 16, 2021 5:50 pmMakes sense. The more I thought about it, for someone that's fortunate with 25x expenses, the stress around getting I Bonds for 10k per year isn't worth the headache. Plan to stay the course with TBM.cork wrote: ↑Fri Apr 16, 2021 2:15 pmI'm a year and a half from retirement, but that isn't why I purchased them. We had a CD mature that was paying 3+% and couldn't find that rate in another "safe" place for holding part of the emergency fund that we wouldn't need right away. It was at about 1.68% when I purchased the IBond.
I still keep my total bond fund at it's original AA within my other retirement accounts.
Federal tax deferral (or tax-free if used for qualified education expenses), state tax exempt.
Designed to at least keep pace with inflation while also protect against deflation.
High liquidity and flexible maturity after 1-year lock up period.
Investment will serve 1 or more of the following 3 functions:
1. Emergency Fund
2. Potentially tax-free education expenses for the kids
3. Help bridge gap between retirement and claiming Social Security
I started buying iBonds several years ago for a threesome purpose: to diversify my TBM holdings (after readings on reasons to buy inflation protected bonds as part of your bond allocation), to expand my tax-advantaged investment space, and to add a second tier to my emergency fund. I don't find logging into Treasury Direct for 5 minutes a year to be much of a headache.
-
- Posts: 28
- Joined: Wed Jun 10, 2020 6:54 am
Re: I Bonds variable rate @ 3.54% in May
Unfortunately, we are some of those Americans who did not know these existed. This would be the first year we would be buying it. Are there any such sure shots that we should be looking at?
We are already heavily invested in the markets and still have about 100k saved for medium term emergency funds sitting in a savings account @ 0.5%. 20 years from retirement.
We are already heavily invested in the markets and still have about 100k saved for medium term emergency funds sitting in a savings account @ 0.5%. 20 years from retirement.
Re: I Bonds variable rate @ 3.54% in May
You're comparing apples and oranges here, Angst. The -1.71% rate shown on the Treasury web page is a real rate, while the 1.68% an April I Bond will earn at for the first six months is a nominal rate. There are two (at least) difficulties in comparing rates between TIPS and I Bonds:Angst wrote: ↑Mon Apr 19, 2021 10:05 pm... The 1.68 presently exceeds the current 5 yr TIPS rate by 3.39%.
- A TIPS real value goes up and down with changes in interest rates.
- Even though they are indexed to the same CPI measure, there is a longer lag in applying changes in the CPI to I Bonds.
For comparison with the 1.77% I Bond increase from October 2021 to April 2022, lets look at the possible increase in the value of the 5-year TIPS maturing in October 2025. If the yield were to remain the same on 6/1/2021 as it was yesterday (-1.872% according to yesterday's WSJ TIPS Quotes), we can compute that an investor would gain 3.55% if he purchased on 12/1/2020 and sold six months later on 6/1/2021. [1]
Code: Select all
1 Matures 10/15/2025
2 Coupon 0.125%
3 Settlement 12/01/2020 06/01/2021 Change
4 Index ratio 1.00312 1.02084 +1.77%[2]
5 Yield -1.326%[3] -1.872%
6 Price 107.33 109.14[4] +1.69%
7 Interest 0.06
8 Value 107.66 111.48 +3.55%
- This is really an academic exercise to show how the CPI is applied to TIPS valuation. It in no way is meant to imply that buying the October 2025 TIPS today is better than buying the April I Bond. Quite the contrary, the I Bond is the better purchase because its 0.0% fixed rate is so much better than the current -1.872% yield of the TIPS.
- The +1.77% increase in the index ratio is the same as the next I Bond's semi-annual inflation rate because they are both based on the September 2020 and March 2021 values of the CPI.
- The -1.326% yield is from the WSJ TIPS Quotes of 12/1/2020. (Unfortunately web page is no longer available.)
- Prices are computed, based on the yield using the Excel PV function. For example
109.14 = -PV(-1.872% / 2, (DATE(2025,10,15) - DATE(2021,6,1)) / (365.25/2), 100 * 0.125% / 2, 100, 0)
Re: I Bonds variable rate @ 3.54% in May
I will be making my first I Bond purchase in May for reason 1. Over the next few years I plan of shifting part of my EF from cash earning very little in an online bank to I Bonds where the money will have a better chance of growing a bit.Darth Xanadu wrote: ↑Mon Apr 19, 2021 11:35 pmThis is what my IPS says about my IBond holdings, specifically "why I invest in IBonds". I concur that it's a slight aggravation to go through the process of building a meaningful pile.Makaveli wrote: ↑Fri Apr 16, 2021 5:50 pmMakes sense. The more I thought about it, for someone that's fortunate with 25x expenses, the stress around getting I Bonds for 10k per year isn't worth the headache. Plan to stay the course with TBM.cork wrote: ↑Fri Apr 16, 2021 2:15 pmI'm a year and a half from retirement, but that isn't why I purchased them. We had a CD mature that was paying 3+% and couldn't find that rate in another "safe" place for holding part of the emergency fund that we wouldn't need right away. It was at about 1.68% when I purchased the IBond.
I still keep my total bond fund at it's original AA within my other retirement accounts.
Federal tax deferral (or tax-free if used for qualified education expenses), state tax exempt.
Designed to at least keep pace with inflation while also protect against deflation.
High liquidity and flexible maturity after 1-year lock up period.
Investment will serve 1 or more of the following 3 functions:
1. Emergency Fund
2. Potentially tax-free education expenses for the kids
3. Help bridge gap between retirement and claiming Social Security
Items 2 and 3 are potentially nice bonuses too.
I'm actually a little excited about getting I Bonds. During the pandemic I learned all about the three fund portfolio and it has become a bit boring doing nothing and staying the course. I Bonds may give me a feeling of doing something.
May all your index funds gain +0.5% today.
Re: I Bonds variable rate @ 3.54% in May
How are I Bonds a practical use for an emergency fund? You can't go to an ATM and withdraw from your I Bond.ApeAttack wrote: ↑Tue Apr 20, 2021 8:59 amI will be making my first I Bond purchase in May for reason 1. Over the next few years I plan of shifting part of my EF from cash earning very little in an online bank to I Bonds where the money will have a better chance of growing a bit.Darth Xanadu wrote: ↑Mon Apr 19, 2021 11:35 pmThis is what my IPS says about my IBond holdings, specifically "why I invest in IBonds". I concur that it's a slight aggravation to go through the process of building a meaningful pile.Makaveli wrote: ↑Fri Apr 16, 2021 5:50 pmMakes sense. The more I thought about it, for someone that's fortunate with 25x expenses, the stress around getting I Bonds for 10k per year isn't worth the headache. Plan to stay the course with TBM.cork wrote: ↑Fri Apr 16, 2021 2:15 pmI'm a year and a half from retirement, but that isn't why I purchased them. We had a CD mature that was paying 3+% and couldn't find that rate in another "safe" place for holding part of the emergency fund that we wouldn't need right away. It was at about 1.68% when I purchased the IBond.
I still keep my total bond fund at it's original AA within my other retirement accounts.
Federal tax deferral (or tax-free if used for qualified education expenses), state tax exempt.
Designed to at least keep pace with inflation while also protect against deflation.
High liquidity and flexible maturity after 1-year lock up period.
Investment will serve 1 or more of the following 3 functions:
1. Emergency Fund
2. Potentially tax-free education expenses for the kids
3. Help bridge gap between retirement and claiming Social Security
Items 2 and 3 are potentially nice bonuses too.
I'm actually a little excited about getting I Bonds. During the pandemic I learned all about the three fund portfolio and it has become a bit boring doing nothing and staying the course. I Bonds may give me a feeling of doing something.
Re: I Bonds variable rate @ 3.54% in May
Ughh, thank you for rescuing me here #Cruncher - and from such a shallow pond! What was I thinking?#Cruncher wrote: ↑Tue Apr 20, 2021 8:21 amYou're comparing apples and oranges here, Angst. The -1.71% rate shown on the Treasury web page is a real rate, while the 1.68% an April I Bond will earn at for the first six months is a nominal rate. There are two (at least) difficulties in comparing rates between TIPS and I Bonds:Angst wrote: ↑Mon Apr 19, 2021 10:05 pm... The 1.68 presently exceeds the current 5 yr TIPS rate by 3.39%.For example, an I Bond bought in April will be indexed to the change in the CPI from September 2020 (260.280) to March 2021 (264.877). But this 1.77% increase won't be applied until October 2021. However, the September 2020 CPI was applied to TIPS principal as of 12/1/2020; and the March 2021 CPI will be applied as of 6/1/2021.
- A TIPS real value goes up and down with changes in interest rates.
- Even though they are indexed to the same CPI measure, there is a longer lag in applying changes in the CPI to I Bonds.
... [SNIP]
Because of the offset or lag between the different systems for applying inflation adjustments for I Bonds and TIPS, I think there can be no definitive answer to the question of whether one should prefer to purchase their 2021 I Bonds at the end of April vs the end of May, given the current 1.68% inflation rate vs the impending May rate of 3.54% - and that we don't know what inflation will be in the future.
If someone were only going to hold their I bond for the minimum of 1 year, they'd presumably want to wait until May to buy so their 3-month interest penalty does not come out of the 3.54%. But otherwise, assuming one plans on holding their new I Bond for several years or perhaps at least 5 years, I still cling to the hunch that one probably ought to buy at the end of April, vs May, given the current I Bond inflation rates choice and my inclination to say that increased inflation will not be lasting long.
#Cruncher, if you were faced with the choice of buying your 2021 I Bonds now or waiting until May, which would you choose?
Re: I Bonds variable rate @ 3.54% in May
It is practical for the part of your emergency fund that you won't need for at at least a year. If you have an EF that is more than 1 year living expenses, then it makes a lot sense to make inflation protected interest in a "safe" investment.tj wrote: ↑Tue Apr 20, 2021 9:04 amHow are I Bonds a practical use for an emergency fund? You can't go to an ATM and withdraw from your I Bond.ApeAttack wrote: ↑Tue Apr 20, 2021 8:59 amI will be making my first I Bond purchase in May for reason 1. Over the next few years I plan of shifting part of my EF from cash earning very little in an online bank to I Bonds where the money will have a better chance of growing a bit.Darth Xanadu wrote: ↑Mon Apr 19, 2021 11:35 pmThis is what my IPS says about my IBond holdings, specifically "why I invest in IBonds". I concur that it's a slight aggravation to go through the process of building a meaningful pile.Makaveli wrote: ↑Fri Apr 16, 2021 5:50 pmMakes sense. The more I thought about it, for someone that's fortunate with 25x expenses, the stress around getting I Bonds for 10k per year isn't worth the headache. Plan to stay the course with TBM.cork wrote: ↑Fri Apr 16, 2021 2:15 pm
I'm a year and a half from retirement, but that isn't why I purchased them. We had a CD mature that was paying 3+% and couldn't find that rate in another "safe" place for holding part of the emergency fund that we wouldn't need right away. It was at about 1.68% when I purchased the IBond.
I still keep my total bond fund at it's original AA within my other retirement accounts.
Federal tax deferral (or tax-free if used for qualified education expenses), state tax exempt.
Designed to at least keep pace with inflation while also protect against deflation.
High liquidity and flexible maturity after 1-year lock up period.
Investment will serve 1 or more of the following 3 functions:
1. Emergency Fund
2. Potentially tax-free education expenses for the kids
3. Help bridge gap between retirement and claiming Social Security
Items 2 and 3 are potentially nice bonuses too.
I'm actually a little excited about getting I Bonds. During the pandemic I learned all about the three fund portfolio and it has become a bit boring doing nothing and staying the course. I Bonds may give me a feeling of doing something.
- vanbogle59
- Posts: 1314
- Joined: Wed Mar 10, 2021 7:30 pm
Re: I Bonds variable rate @ 3.54% in May
This thorny issue is shared by all 3-funders, gone-fishing-ers, buy-and-holders....
"What do I DO with all this free time?"
If you choose investing in I Bonds, enjoy. It beats churning your gains away on transaction fees.
- anon_investor
- Posts: 15122
- Joined: Mon Jun 03, 2019 1:43 pm
Re: I Bonds variable rate @ 3.54% in May
But after the 1 year holding period is over, you can redeem a portion of your I Bonds and the funds would be transferred to your linked bank account within a couple of business days. People rarely have an emergency were they immediately need cash same day. I have I Bonds as a tier of my emergency fund. Being able to access those funds in a couple of business days if necessary is fast enough for me.tj wrote: ↑Tue Apr 20, 2021 9:04 amHow are I Bonds a practical use for an emergency fund? You can't go to an ATM and withdraw from your I Bond.ApeAttack wrote: ↑Tue Apr 20, 2021 8:59 amI will be making my first I Bond purchase in May for reason 1. Over the next few years I plan of shifting part of my EF from cash earning very little in an online bank to I Bonds where the money will have a better chance of growing a bit.Darth Xanadu wrote: ↑Mon Apr 19, 2021 11:35 pmThis is what my IPS says about my IBond holdings, specifically "why I invest in IBonds". I concur that it's a slight aggravation to go through the process of building a meaningful pile.Makaveli wrote: ↑Fri Apr 16, 2021 5:50 pmMakes sense. The more I thought about it, for someone that's fortunate with 25x expenses, the stress around getting I Bonds for 10k per year isn't worth the headache. Plan to stay the course with TBM.cork wrote: ↑Fri Apr 16, 2021 2:15 pm
I'm a year and a half from retirement, but that isn't why I purchased them. We had a CD mature that was paying 3+% and couldn't find that rate in another "safe" place for holding part of the emergency fund that we wouldn't need right away. It was at about 1.68% when I purchased the IBond.
I still keep my total bond fund at it's original AA within my other retirement accounts.
Federal tax deferral (or tax-free if used for qualified education expenses), state tax exempt.
Designed to at least keep pace with inflation while also protect against deflation.
High liquidity and flexible maturity after 1-year lock up period.
Investment will serve 1 or more of the following 3 functions:
1. Emergency Fund
2. Potentially tax-free education expenses for the kids
3. Help bridge gap between retirement and claiming Social Security
Items 2 and 3 are potentially nice bonuses too.
I'm actually a little excited about getting I Bonds. During the pandemic I learned all about the three fund portfolio and it has become a bit boring doing nothing and staying the course. I Bonds may give me a feeling of doing something.
Re: I Bonds variable rate @ 3.54% in May
Yup. That's my thinking. If I need to access my EF in 5 years, I will have 4 years of I Bonds available. I also will have some of my EF in cash as well.anon_investor wrote: ↑Tue Apr 20, 2021 9:38 amBut after the 1 year holding period is over, you can redeem a portion of your I Bonds and the funds would be transferred to your linked bank account within a couple of business days. People rarely have an emergency were they immediately need cash same day. I have I Bonds as a tier of my emergency fund. Being able to access those funds in a couple of business days if necessary is fast enough for me.tj wrote: ↑Tue Apr 20, 2021 9:04 amHow are I Bonds a practical use for an emergency fund? You can't go to an ATM and withdraw from your I Bond.ApeAttack wrote: ↑Tue Apr 20, 2021 8:59 amI will be making my first I Bond purchase in May for reason 1. Over the next few years I plan of shifting part of my EF from cash earning very little in an online bank to I Bonds where the money will have a better chance of growing a bit.Darth Xanadu wrote: ↑Mon Apr 19, 2021 11:35 pmThis is what my IPS says about my IBond holdings, specifically "why I invest in IBonds". I concur that it's a slight aggravation to go through the process of building a meaningful pile.
Federal tax deferral (or tax-free if used for qualified education expenses), state tax exempt.
Designed to at least keep pace with inflation while also protect against deflation.
High liquidity and flexible maturity after 1-year lock up period.
Investment will serve 1 or more of the following 3 functions:
1. Emergency Fund
2. Potentially tax-free education expenses for the kids
3. Help bridge gap between retirement and claiming Social Security
Items 2 and 3 are potentially nice bonuses too.
I'm actually a little excited about getting I Bonds. During the pandemic I learned all about the three fund portfolio and it has become a bit boring doing nothing and staying the course. I Bonds may give me a feeling of doing something.
If I need to make purchases asap, I have several credit cards which I can pay off in a month or so. Plenty of time to liquidate the bonds.
May all your index funds gain +0.5% today.
Re: I Bonds variable rate @ 3.54% in May
So does that mean you will have no buffer at all in your checking or savings account and rely on selling I Bonds? when you need to generate cash? I don't know if I could adapt to that. I guess I like having my instantaneous transfer cushion in my Alliant Savings Account and keep about 2 months expenses in my Alliant Checking account.ApeAttack wrote: ↑Tue Apr 20, 2021 10:06 amYup. That's my thinking. If I need to access my EF in 5 years, I will have 4 years of I Bonds available. I also will have some of my EF in cash as well.anon_investor wrote: ↑Tue Apr 20, 2021 9:38 amBut after the 1 year holding period is over, you can redeem a portion of your I Bonds and the funds would be transferred to your linked bank account within a couple of business days. People rarely have an emergency were they immediately need cash same day. I have I Bonds as a tier of my emergency fund. Being able to access those funds in a couple of business days if necessary is fast enough for me.tj wrote: ↑Tue Apr 20, 2021 9:04 amHow are I Bonds a practical use for an emergency fund? You can't go to an ATM and withdraw from your I Bond.ApeAttack wrote: ↑Tue Apr 20, 2021 8:59 amI will be making my first I Bond purchase in May for reason 1. Over the next few years I plan of shifting part of my EF from cash earning very little in an online bank to I Bonds where the money will have a better chance of growing a bit.Darth Xanadu wrote: ↑Mon Apr 19, 2021 11:35 pm
This is what my IPS says about my IBond holdings, specifically "why I invest in IBonds". I concur that it's a slight aggravation to go through the process of building a meaningful pile.
Federal tax deferral (or tax-free if used for qualified education expenses), state tax exempt.
Designed to at least keep pace with inflation while also protect against deflation.
High liquidity and flexible maturity after 1-year lock up period.
Investment will serve 1 or more of the following 3 functions:
1. Emergency Fund
2. Potentially tax-free education expenses for the kids
3. Help bridge gap between retirement and claiming Social Security
Items 2 and 3 are potentially nice bonuses too.
I'm actually a little excited about getting I Bonds. During the pandemic I learned all about the three fund portfolio and it has become a bit boring doing nothing and staying the course. I Bonds may give me a feeling of doing something.
If I need to make purchases asap, I have several credit cards which I can pay off in a month or so. Plenty of time to liquidate the bonds.
Re: I Bonds variable rate @ 3.54% in May
I don't think that is the intent. My family keeps $2-10K on a monthly basis in our checking account which includes our normal expenditures plus our monthly vacation budget (annual divided by 12), etc. Our E Fund was a separate account @ $28K and I now have $20K in I-Bonds, $6K in online checking and $2K at local bank. this will be fine for "emergency" like when a cherry picker from tree crew drove through septic tank i told them didn't exist, etc.tj wrote: ↑Tue Apr 20, 2021 10:45 amSo does that mean you will have no buffer at all in your checking or savings account and rely on selling I Bonds? when you need to generate cash? I don't know if I could adapt to that. I guess I like having my instantaneous transfer cushion in my Alliant Savings Account and keep about 2 months expenses in my Alliant Checking account.ApeAttack wrote: ↑Tue Apr 20, 2021 10:06 amYup. That's my thinking. If I need to access my EF in 5 years, I will have 4 years of I Bonds available. I also will have some of my EF in cash as well.anon_investor wrote: ↑Tue Apr 20, 2021 9:38 amBut after the 1 year holding period is over, you can redeem a portion of your I Bonds and the funds would be transferred to your linked bank account within a couple of business days. People rarely have an emergency were they immediately need cash same day. I have I Bonds as a tier of my emergency fund. Being able to access those funds in a couple of business days if necessary is fast enough for me.tj wrote: ↑Tue Apr 20, 2021 9:04 amHow are I Bonds a practical use for an emergency fund? You can't go to an ATM and withdraw from your I Bond.ApeAttack wrote: ↑Tue Apr 20, 2021 8:59 am
I will be making my first I Bond purchase in May for reason 1. Over the next few years I plan of shifting part of my EF from cash earning very little in an online bank to I Bonds where the money will have a better chance of growing a bit.
Items 2 and 3 are potentially nice bonuses too.
I'm actually a little excited about getting I Bonds. During the pandemic I learned all about the three fund portfolio and it has become a bit boring doing nothing and staying the course. I Bonds may give me a feeling of doing something.
If I need to make purchases asap, I have several credit cards which I can pay off in a month or so. Plenty of time to liquidate the bonds.
Re: I Bonds variable rate @ 3.54% in May
<This is what my IPS says about my IBond holdings, specifically "why I invest in IBonds". I concur that it's a slight aggravation to go through the process of building a meaningful pile.
Federal tax deferral (or tax-free if used for qualified education expenses), state tax exempt.
Designed to at least keep pace with inflation while also protect against deflation.
High liquidity and flexible maturity after 1-year lock up period.
Investment will serve 1 or more of the following 3 functions:
1. Emergency Fund
2. Potentially tax-free education expenses for the kids
3. Help bridge gap between retirement and claiming Social Security>
Appreciate the food for thought.
Federal tax deferral (or tax-free if used for qualified education expenses), state tax exempt.
Designed to at least keep pace with inflation while also protect against deflation.
High liquidity and flexible maturity after 1-year lock up period.
Investment will serve 1 or more of the following 3 functions:
1. Emergency Fund
2. Potentially tax-free education expenses for the kids
3. Help bridge gap between retirement and claiming Social Security>
Appreciate the food for thought.
Re: I Bonds variable rate @ 3.54% in May
This is what I'm thinking of doing. As an example, if I have a 80k EF then 40k can be in cash (online bank, checking account) and 40k in I-Bonds. Credit cards will get us through the time until liquidation.Doc7 wrote: ↑Tue Apr 20, 2021 11:10 amI don't think that is the intent. My family keeps $2-10K on a monthly basis in our checking account which includes our normal expenditures plus our monthly vacation budget (annual divided by 12), etc. Our E Fund was a separate account @ $28K and I now have $20K in I-Bonds, $6K in online checking and $2K at local bank. this will be fine for "emergency" like when a cherry picker from tree crew drove through septic tank i told them didn't exist, etc.tj wrote: ↑Tue Apr 20, 2021 10:45 amSo does that mean you will have no buffer at all in your checking or savings account and rely on selling I Bonds? when you need to generate cash? I don't know if I could adapt to that. I guess I like having my instantaneous transfer cushion in my Alliant Savings Account and keep about 2 months expenses in my Alliant Checking account.ApeAttack wrote: ↑Tue Apr 20, 2021 10:06 amYup. That's my thinking. If I need to access my EF in 5 years, I will have 4 years of I Bonds available. I also will have some of my EF in cash as well.anon_investor wrote: ↑Tue Apr 20, 2021 9:38 amBut after the 1 year holding period is over, you can redeem a portion of your I Bonds and the funds would be transferred to your linked bank account within a couple of business days. People rarely have an emergency were they immediately need cash same day. I have I Bonds as a tier of my emergency fund. Being able to access those funds in a couple of business days if necessary is fast enough for me.
If I need to make purchases asap, I have several credit cards which I can pay off in a month or so. Plenty of time to liquidate the bonds.
Ultimately, over the next 10-20 years the extra income generated by 40k in I-Bonds likely will be dwarfed by the gains in my 403b, but making several thousand extra dollars isn't too bad. It is like a one or two free vacations 10-20 years from now. It also makes me feel like I'm doing something positive for my finances and keeps me distracted from wanting to tinker with my 3-fund portfolio.
May all your index funds gain +0.5% today.
Re: I Bonds variable rate @ 3.54% in May
I'm getting better at not logging into Fidelity each day to check on how my 403b is doing.vanbogle59 wrote: ↑Tue Apr 20, 2021 9:26 amThis thorny issue is shared by all 3-funders, gone-fishing-ers, buy-and-holders....
"What do I DO with all this free time?"
If you choose investing in I Bonds, enjoy. It beats churning your gains away on transaction fees.
May all your index funds gain +0.5% today.
-
- Posts: 15363
- Joined: Fri Apr 10, 2015 12:29 am
Re: I Bonds variable rate @ 3.54% in May
This makes i-bonds a little less attractive relative to other bonds, but it is the state you live in when you cash them that matters, not where you live when you buy them.Makaveli wrote: ↑Tue Apr 20, 2021 7:17 am1 of 9 states that do no have an income tax, so we're good on this front.Northern Flicker wrote: ↑Tue Apr 20, 2021 1:15 amI guess I would add that if you live in a state with income taxes, you would have to estimate after-tax expected returns to see if the above claim were true, as i-bonds are state-tax-free.Northern Flicker wrote: ↑Mon Apr 19, 2021 10:20 pmMy opinion is that it makes sense if you have assets in a taxable account that you want invested in fixed income. If you are holding stock in a 401K and i-bonds, your after-tax return is likely to be higher holding a stock index fund in the taxable space and bonds in the tax-qualified account.
Last edited by Northern Flicker on Tue Apr 20, 2021 4:24 pm, edited 2 times in total.
- anon_investor
- Posts: 15122
- Joined: Mon Jun 03, 2019 1:43 pm
Re: I Bonds variable rate @ 3.54% in May
How much was that "emergency"?Doc7 wrote: ↑Tue Apr 20, 2021 11:10 am
I don't think that is the intent. My family keeps $2-10K on a monthly basis in our checking account which includes our normal expenditures plus our monthly vacation budget (annual divided by 12), etc. Our E Fund was a separate account @ $28K and I now have $20K in I-Bonds, $6K in online checking and $2K at local bank. this will be fine for "emergency" like when a cherry picker from tree crew drove through septic tank i told them didn't exist, etc.
We have a similar tiered EF. 2-3 months in the bank and 5+ months in I Bonds. At least where I live almost all home maintenance emergencies can be paid by CC, although sometimes you can get a discount by paying via check. The I Bonds are more for a job loss type situation and we also have a large taxable brokerage account in equities that could be accessed if needed. When interest rates were higher we had our emergency fund in no penalty CDs, but with rates so low, I Bonds just make more sense.
-
- Posts: 3181
- Joined: Mon Feb 01, 2016 10:49 am
Re: I Bonds variable rate @ 3.54% in May
Would anyone sell his Bonds allocation (in a taxable account) to buy i bonds? I am considering this idea, but not sure if it worth the hassle and paying the taxes.
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather
Re: I Bonds variable rate @ 3.54% in May
I max out every year and glad to have been doing it since suddenly "only inflation" seems like a good deal. So I would start buying $10,000 immediately and keep doing it each year as long as I bonds are offering a superior risk adjusted return to bond funds.BogleMelon wrote: ↑Tue Apr 20, 2021 1:38 pm Would anyone sell his Bonds allocation (in a taxable account) to buy i bonds? I am considering this idea, but not sure if it worth the hassle and paying the taxes.
70% Global Stocks / 30% Bonds
-
- Posts: 1428
- Joined: Wed Oct 14, 2020 1:52 am
Re: I Bonds variable rate @ 3.54% in May
Personally I buy them and am in my 30s. I think they can make sense if one is already filling all of their tax deferred and tax free accounts, is looking for more ways to save, and needs bonds. Using these to act as a hand rolled annuity in early retirement to delay taking social securityMakaveli wrote: ↑Fri Apr 16, 2021 5:50 pmMakes sense. The more I thought about it, for someone that's fortunate with 25x expenses, the stress around getting I Bonds for 10k per year isn't worth the headache. Plan to stay the course with TBM.cork wrote: ↑Fri Apr 16, 2021 2:15 pmI'm a year and a half from retirement, but that isn't why I purchased them. We had a CD mature that was paying 3+% and couldn't find that rate in another "safe" place for holding part of the emergency fund that we wouldn't need right away. It was at about 1.68% when I purchased the IBond.Makaveli wrote: ↑Fri Apr 16, 2021 6:30 amAnd which category do you fall into?
More so interested if this makes sense for someone in their 30’s.
I still keep my total bond fund at it's original AA within my other retirement accounts.
"Anyone who claims to understand quantum theory is either lying or crazy" -- Richard Feynman
Re: I Bonds variable rate @ 3.54% in May
And let's not forget that every single US resident does not have 10, or 15, or 25k they are able to part from. Far from it, actually.Wk1014 wrote: ↑Fri Apr 16, 2021 6:45 amYou missed a few 0’s $320,000,000* $10,000 = $3,0200,000,000,000 or $3.2 trillion not to mention the $5k in paper with tax return and $10k per trustray.james wrote: ↑Thu Apr 15, 2021 11:59 amIf every single US resident bought 10K I-bonds that is still 320mill * 10K ~= 3.2B dollars. US market cap is 45Trillion!scot wrote: ↑Thu Apr 15, 2021 10:25 am I know this is completely and utterly market timing and has no place on this site.....
but...
will this not have detrimental impact on the total stock market funds when everyone sells April 30th, May 1st to buy I bonds? The crash in march represented about 2% of shareholders selling total stock funds. Are 2% of folks not going to chase this rate which is multiple times higher than any other fixed income option thus having a Really bad day/buying opportunity for bogleheads? Or does the $10k per person limit reduce it enough it doesn't have much impact on the bigger picture?
Re: I Bonds variable rate @ 3.54% in May
$6K or approx 1 month of our expenses, i dont have more cash than that (only about 1 months worth at a given time) that isn't already in the official "emergency fund"anon_investor wrote: ↑Tue Apr 20, 2021 12:59 pmHow much was that "emergency"?Doc7 wrote: ↑Tue Apr 20, 2021 11:10 am
I don't think that is the intent. My family keeps $2-10K on a monthly basis in our checking account which includes our normal expenditures plus our monthly vacation budget (annual divided by 12), etc. Our E Fund was a separate account @ $28K and I now have $20K in I-Bonds, $6K in online checking and $2K at local bank. this will be fine for "emergency" like when a cherry picker from tree crew drove through septic tank i told them didn't exist, etc.
We have a similar tiered EF. 2-3 months in the bank and 5+ months in I Bonds. At least where I live almost all home maintenance emergencies can be paid by CC, although sometimes you can get a discount by paying via check. The I Bonds are more for a job loss type situation and we also have a large taxable brokerage account in equities that could be accessed if needed. When interest rates were higher we had our emergency fund in no penalty CDs, but with rates so low, I Bonds just make more sense.
Re: I Bonds variable rate @ 3.54% in May
Unless you've got very long term bonds in your taxable account, it's hard to envision that you've got much of an unrealized capital gain there to pay.BogleMelon wrote: ↑Tue Apr 20, 2021 1:38 pm Would anyone sell his Bonds allocation (in a taxable account) to buy i bonds? I am considering this idea, but not sure if it worth the hassle and paying the taxes.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
Re: I Bonds variable rate @ 3.54% in May
I'm much better at putting together arcane analyses than anything practical like forecasting, Angst. (To paraphrase one member's, signature, I find it particularly hard to forecast the future.) But since you ask ... I'd probably wait until May, but I don't think it would make a lot of difference. My personal case is based on the following scenario:
- I'll assume the fixed rate remains at 0% in May, and that the same face amount would be purchased either month. For simplicity, I'll ignore income tax due at time of redemption.
- If I delay to May, the investment funds will sit in a savings account for one month at a 0.5% interest rate.
- I'll probably hold the I Bond at least 5 years, but less than 30. [2]
- When I get close to the point of redeeming my I Bonds, I'll try to wait until the end of a six-month period with a high composite rate. For illustration, assume a high rate is announced November 2030 and I decide to redeem after the six months that rate is applied.
- Therefore, if I buy in May, I'd redeem the first of May 2031. But since the inflation rate is applied to an April purchase five months later than to a May purchase, if I buy in April, I wouldn't redeem until the first of October 2031, five months later.
- The following chart shows this schematically, where "t" represents the presumed high composite rate that I will redeem after earning.
Code: Select all
Apr Oct Apr Oct Buy 2021 2021 2031 2031 ----- v v v v April aaaaaabbbbbb............rrrrrrsssssstttttt (10.5 years) May bbbbbbcccccc............sssssstttttt (10.0 years) ^ ^ ^ ^ May Nov Nov May 2021 2021 2030 2031 where "a" represents the 1.68% composite rate announced November 2020 and "b" represents the 3.54% composite rate to be announced May 2021 and all the other rates "c" through "t" are not yet known.
- Every six-month composite rate "b" through "t" will be applied to both an April and a May purchase. However, composite rate "a", 1.68%, will be applied only to the April purchase. Therefore the redemption value of an April purchase will be 0.84% more than that of a May purchase. [3]
- I'll assume that upon redemption, the proceeds of a May purchase will be deposited into a savings account for the five months from May 1 2031 to October 1 2031, when an April purchase would have been redeemed.
- For the overall return of a May purchase to equal that of an April purchase, the redemption proceeds would need to earn at a 1.92% annual rate for the five months May 1 to Oct 1 2031. [4]
- I'll guess that savings account interest will be more than 1.92% in ten years, making the overall return of a May purchase slightly more than that of an April purchase.
- The question of buying in April or May is academic for me since I already shot my bolt in January.
- I expect to be long dead before 30 years, and I plan on liquidating all my I Bonds before then to simplify my heir's life. I'd also redeem before 30 years if real rates, either on I Bonds or on TIPS, rise substantially above 0%.
- This ignores the fact that all I Bond values are a multiple of a $25 bond's value which is rounded to the nearest penny every six months.
- 0.84% = 0.5% * (1/12) + 1.92% * (5/12)
Re: I Bonds variable rate @ 3.54% in May
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.
(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.
May all your index funds gain +0.5% today.
Re: I Bonds variable rate @ 3.54% in May
Will be doing our first ibond purchase in May. Question for those who have done this before on Treasury Direct. Do you just buy one bond for the full amount you want to invest (up to $10k)? Or do you buy multiple bonds for various denominations? Reason for the question is that my intent here is a 2nd tier emergency fund. There could be an instance where I only need to pull $2-$5k from the ibonds, so wouldn't want to sell the full $10k. Or does it not matter and the funds are treated like a savings account which can be pulled in any denomination at any time, recognizing the 1- and 5-year hold period penalties.