I Bonds Mega Thread (I Bond Heads Rejoice!)
Re: New I Bond Variable Rate 7.12% for November 2021
xyzzy
Last edited by mary1492 on Tue Oct 04, 2022 4:40 pm, edited 1 time in total.
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
If I bought I bonds in September, can I buy them again in January? Is it once per calendar year or once every 12 months?
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
It is once per calendar year, so you can buy again in January (and get the annualized rate of 7.12% for the first 6 months on that purchase).
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
xyzzy
Last edited by mary1492 on Tue Oct 04, 2022 4:40 pm, edited 1 time in total.
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Re: iBonds @ 7.12%
It’s all about optics which is why some posters are focusing on the 0% fixed rate return. They obviously don’t like “floating” rate instruments with a “zero floor” or “base rate of zero”. They also confuse TIPS with I bonds. Those who say it’s not worth it must not understand that “savings rate” is a major factor in accumulating assets in any asset class. Clearly, I bonds are not worth it to them as they never allocated any savings to them and can not benefit in a meaningful way from $500+ in gross interest income.anon_investor wrote: ↑Mon Nov 01, 2021 10:06 pmWhich makes I Bonds an amazing long term fixed income investment, all weather!Mel Lindauer wrote: ↑Mon Nov 01, 2021 10:05 pmCorrect. And the higher the rate of DEflation, the higher the REAL return on even those 0% I Bonds.anon_investor wrote: ↑Mon Nov 01, 2021 9:52 pmFYI I Bonds cannot have a composite rate below 0%. So even if CPI was -3%, the composite rate would be 0%.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: New I Bond Variable Rate 7.12% for November 2021
Correct! I was replying on my phone. Thank you for restating everything more eloquently.SnowBog wrote: ↑Tue Nov 02, 2021 12:55 am I think exodusNH's point is that doesn't necessarily mean you are losing by 7%...
First, I'll add that the 7% rate is really only for 6 months of the year, the prior 6 months was 3.5%. If you average that out, its roughly 5.25% for the 12 month period. Maybe the next 6 months will be a lower rate - time will tell...
Second, as exodusNH was pointing out - Treasury sets the rate based a specific "basket of goods" as noted here: https://www.treasurydirect.gov/indiv/re ... s.htm#infl
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Re: New I Bond Variable Rate 7.12% for November 2021
+100%mary1492 wrote: ↑Tue Nov 02, 2021 4:27 amThis is a key point that many folks either overlook or do not understand. They simply go around giving blanket statements how folks that are not fully invested or don't have a high equity allocation are going to lose their shirts to inflation over time, and that's not necessarily the case.SnowBog wrote: ↑Tue Nov 02, 2021 12:55 amI don't know the details of the CPI-U well enough to cite specifics... But let's use an example... Maybe the "basket of goods" includes 2 pounds of bacon, 3 dozen eggs, and 3 gallons of milk for a month. But in your house - you don't eat bacon or drink milk - but eat 2x the amount of eggs. Your particular inflation would be different - as the massive price change of bacon wouldn't apply to you - but any price change in eggs would have double the impact. Or maybe another example is 40 gallons of gas for your car for the month, but you drive an electric vehicle (or don't have a car at all) - so the difference in gas is meaningless to you.non-seasonally adjusted Consumer Price Index for all Urban Consumers (CPI-U) for all items, including food and energy
So your personal inflation rate - which is really "how much more do the things I buy cost" - may be more or less than the CPI-U inflation rate (which is based on "buying" a specific set of items - and tracking changes over time). But for most people - the CPI-U is a "good enough" approximation...
I want to take your point to a major relevant item which impacts everyone ... Housing. If you listen to economists in the know (I like Danielle DiMartino Booth - go check her out on Youtube), they will point to the recent rise in housing costs, primarily rent, but also mortgage/ownership as well. Rent increases have been a major recent contributor to CPI increases, and are "sticky". Now, do you own your home? Have a fixed rate mortgage or no mortgage? Live rent free in your parent's basement? If so, then this major CPI component does not affect you, or affects you less than others. So, of the recent inflation increases, you do not feel the effects as much and your personal buying power has not lost as much ground.
Well said. DW and I are in the group of retired folks with no debt, good retirement income so inflation will have less impact on us. Now, for our kids...that's another story. However, they have secure jobs with good pay so they'll move along just fine.......
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
This has updated.whodidntante wrote: ↑Mon Nov 01, 2021 10:48 pmThey blew their budget on that 7.12% image, only to realize that the Treasury-owned abacus could not count that high.
My November 2018 bonds updated and are paying 7.64%
http://kirklindstrom.com/Articles/iBond ... Bonds.html shows interest rates for I-bonds depending on purchase date. The high is bonds purchased in May 2000 - 10.85%! My oldest bonds will only be paying 10.23% once the interest rate is refreshed at the six-month mark.
The downside is transitory inflation means 10% doesn't go as far as it used to, but it's better than any fixed income investment is paying.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
I still have this question open, hope someone can answer it. On the long term, is it better to fill the ibonds space first before investing in BND (total bond index ETF)? Or BND is more likely to beat inflation?
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
If inflation remains high, then it's a great investment. If inflation drops and the composite rate becomes garbage, then sell. I'm not seeing a downside to purchasing I-bonds to use as an EF besides the one-year hold period. Or for a retiree with a low risk tolerance sitting on cash worried about inflation, it sounds great at the moment.
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
How do I set up a beneficiary on my TreasuryDirect account? Can my wife be my beneficiary and I her beneficiary if we both hold I bonds?
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
xyzzy
Last edited by mary1492 on Tue Oct 04, 2022 4:39 pm, edited 1 time in total.
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
xyzzy
Last edited by mary1492 on Tue Oct 04, 2022 3:21 am, edited 1 time in total.
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Re: New I Bond Variable Rate 7.12% for November 2021
I agree with the concept of one’s personal inflation rate mattering too. I’m not sure if your kids have debt, but if it’s at a low rate, I wouldn’t necessarily worry about those debt loads impacting personal inflation negatively. It could potentially have the opposite effect. I loaded up on mortgage debt earlier this year by doing a cash-out refinance on my mortgage. The rate is locked for 30 years at 2.375% (effectively 2.28% due to itemizing on state taxes). The mortgage is by far my biggest expense and my property taxes are second biggest. Due to Prop 13 in California, the property taxes don’t change much over time. About half of my spending goes toward housing and that portion is basically immune to inflation.fishandgolf wrote: ↑Tue Nov 02, 2021 8:43 am+100%mary1492 wrote: ↑Tue Nov 02, 2021 4:27 amThis is a key point that many folks either overlook or do not understand. They simply go around giving blanket statements how folks that are not fully invested or don't have a high equity allocation are going to lose their shirts to inflation over time, and that's not necessarily the case.SnowBog wrote: ↑Tue Nov 02, 2021 12:55 amI don't know the details of the CPI-U well enough to cite specifics... But let's use an example... Maybe the "basket of goods" includes 2 pounds of bacon, 3 dozen eggs, and 3 gallons of milk for a month. But in your house - you don't eat bacon or drink milk - but eat 2x the amount of eggs. Your particular inflation would be different - as the massive price change of bacon wouldn't apply to you - but any price change in eggs would have double the impact. Or maybe another example is 40 gallons of gas for your car for the month, but you drive an electric vehicle (or don't have a car at all) - so the difference in gas is meaningless to you.non-seasonally adjusted Consumer Price Index for all Urban Consumers (CPI-U) for all items, including food and energy
So your personal inflation rate - which is really "how much more do the things I buy cost" - may be more or less than the CPI-U inflation rate (which is based on "buying" a specific set of items - and tracking changes over time). But for most people - the CPI-U is a "good enough" approximation...
I want to take your point to a major relevant item which impacts everyone ... Housing. If you listen to economists in the know (I like Danielle DiMartino Booth - go check her out on Youtube), they will point to the recent rise in housing costs, primarily rent, but also mortgage/ownership as well. Rent increases have been a major recent contributor to CPI increases, and are "sticky". Now, do you own your home? Have a fixed rate mortgage or no mortgage? Live rent free in your parent's basement? If so, then this major CPI component does not affect you, or affects you less than others. So, of the recent inflation increases, you do not feel the effects as much and your personal buying power has not lost as much ground.
Well said. DW and I are in the group of retired folks with no debt, good retirement income so inflation will have less impact on us. Now, for our kids...that's another story. However, they have secure jobs with good pay so they'll move along just fine.......
By the way, the extra $150k in cash that I took out of the house at 2.3% is costing me $3500/year in interest. I’ve used that same money to earn $10k this year, however. Currently, $20k of the money I’m paying 2.3% interest on is paying me 7.12% (6.27% after tax). In January, I’ll direct another $20k toward I Bonds. Debt can be a money-maker in times like these as it can provide protection against inflation and maybe even be a net positive. I’m planning to go into credit card debt next (at 0%). I never thought I’d say those words but these are bizarre times.
Edit: I need to make a correction. $20k of the money I took out is currently earning 3.54%, not 7.12% quite yet. But it will in a few months.
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
We can't know that ahead of time. Investing in a bond fund allows you rebalance easily and there are no limits on how much you can buy (unlike the 10k limit per year with I-Bonds).BogleMelon wrote: ↑Tue Nov 02, 2021 9:58 am I still have this question open, hope someone can answer it. On the long term, is it better to fill the ibonds space first before investing in BND (total bond index ETF)? Or BND is more likely to beat inflation?
I-Bonds Savings Bonds are designed for savings... buying-and-holding for long periods of time. I am using them for part of my EF because they offer better rates than a HYSA. Hopefully I won't need to sell them until they mature or there is a significant increase in the fixed rate.
May all your index funds gain +0.5% today.
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
And I'd maybe split and/or reverse the question...ApeAttack wrote: ↑Tue Nov 02, 2021 10:56 amWe can't know that ahead of time. Investing in a bond fund allows you rebalance easily and there are no limits on how much you can buy (unlike the 10k limit per year with I-Bonds).BogleMelon wrote: ↑Tue Nov 02, 2021 9:58 am I still have this question open, hope someone can answer it. On the long term, is it better to fill the ibonds space first before investing in BND (total bond index ETF)? Or BND is more likely to beat inflation?
I-Bonds Savings Bonds are designed for savings... buying-and-holding for long periods of time. I am using them for part of my EF because they offer better rates than a HYSA. Hopefully I won't need to sell them until they mature or there is a significant increase in the fixed rate.
In the context of "emergency fund" and/or alternative to "savings" accounts - it likely makes sense to prioritize I Bonds.
But beyond that, trying to compare I Bonds with say BND, misses some broader context.
It's generally recommended to put bonds in tax-deferred accounts like your 401k first. That let's you do things like rebalance in the account, avoid [defer] taxes, probably save on long term taxes (bonds will grow less, meaning the account will grow less and thus have smaller RMDs and smaller taxes).
Conversely, it's better to put "total stock index" in taxable accounts. With qualified dividends and capital gains, they are very tax efficient (more then bonds).
Now, if you are running out of space for bonds in your tax-deferred accounts, then you may want to think about adding bonds to your taxable accounts. Savings Bonds (like I Bonds) - while an after-tax (aka taxable) account, they can optionally have interest be tax-deferred. If you are in a high tax bracket, that expended tax-deferred space may be useful.
As for which will have the best return over time (I Bonds vs. BND), as was stated we'll only know after the fact.
But the way I think about it, I Bonds are a great "reserve" of money - at 0% fixed - you arguably aren't gaining or losing anything (other than eventual taxes) - just tracking inflation. If inflation is high and prolonged, they'll probably have better results than nominal bonds. But that's highly subject to the bond duration, your investment horizon, and the timing of the inflation.
Funds like BND benefit from both dividends (similar to I Bonds interest) but also market gains. That combination usually means that if your bond duration is aligned with your investment time line, impacts of inflation should balance out. As an example, while a higher interest rate will lower the current "value" of a bond fund, over time the higher bond payments from that higher interest rates will offset that.
More to the point, I generally don't think of it being I Bonds or BND (or similar), more likely its both. Having both provides extra diversification. I Bonds are not exposed to inflation or market risks. BND (or similar) is exposed to inflation but my benefit from market forces (and can be used for rebalancing).
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
I think there is kind of an overlap between the Treasury side of BND and I Bonds. This is why I only hold corporate bond funds elsewhere.
7.12% for bonds issued November 2021 - April 2022
[Merged into ongoing I-bond discussion -- moderator oldcomputerguy]
What did I just read? This is an obvious buy, right?
https://www.treasurydirect.gov/indiv/pr ... glance.htm
What did I just read? This is an obvious buy, right?
https://www.treasurydirect.gov/indiv/pr ... glance.htm
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Re: 7.12% for bonds issued November 2021 - April 2022
Go read the I-Bond mega thread.expat wrote: ↑Wed Nov 03, 2021 12:43 pm What did I just read? This is an obvious buy, right?
https://www.treasurydirect.gov/indiv/pr ... glance.htm
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: 7.12% for bonds issued November 2021 - April 2022
This looks kinda weird. Maximum (electronic) purchase of $10,000 worth?
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Re: 7.12% for bonds issued November 2021 - April 2022
If you have money to allocate to fixed income, and $10,000 per person per year is a meaningful sum, and you are okay having no access to this money for 1 year, and you don't plan to use the money for rapid rabalancing, then yes, they are a great buy.expat wrote: ↑Wed Nov 03, 2021 12:43 pm What did I just read? This is an obvious buy, right?
https://www.treasurydirect.gov/indiv/pr ... glance.htm
Since the above all applies to my wife and I, I bought $20,000 for my wife and I this year, and I plan to buy another $20,000 in January. You can also get up to $5,000 in paper I bonds with federal tax return money per return, for a max of $15,000 for individuals and $25,000 for couples each year, in case you really want to max things out.
Founding Father
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
I don't understand this. Is this something I can buy in a vanguard account? 401k, brokerage, roth?
Re: 7.12% for bonds issued November 2021 - April 2022
Don't forgot another $10k for those with trust accounts.FoundingFather wrote: ↑Wed Nov 03, 2021 1:25 pmIf you have money to allocate to fixed income, and $10,000 per person per year is a meaningful sum, and you are okay having no access to this money for 1 year, and you don't plan to use the money for rapid rabalancing, then yes, they are a great buy.expat wrote: ↑Wed Nov 03, 2021 12:43 pm What did I just read? This is an obvious buy, right?
https://www.treasurydirect.gov/indiv/pr ... glance.htm
Since the above all applies to my wife and I, I bought $20,000 for my wife and I this year, and I plan to buy another $20,000 in January. You can also get up to $5,000 in paper I bonds with federal tax return money per return, for a max of $15,000 for individuals and $25,000 for couples each year, in case you really want to max things out.
Founding Father
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
Nope you can only buy from https://www.treasurydirect.gov/indiv/re ... s_ibuy.htm
There is no secondary market or avenue to buy.
80% VOO | 20% BND+TBILL+CASH | Don't believe Nobody because Nobody knows nothin' - Anon
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
Does this scenario make sense:
* Buy $10,000 of I-Bonds (yielding approx. 7% in the next months) using the proceeds from my HELOC (costing 3.25%).
* The HELOC balance would be paid off in the next 6 months.
Thanks
* Buy $10,000 of I-Bonds (yielding approx. 7% in the next months) using the proceeds from my HELOC (costing 3.25%).
* The HELOC balance would be paid off in the next 6 months.
Thanks
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
xyzzy
Last edited by mary1492 on Tue Oct 04, 2022 3:20 am, edited 1 time in total.
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
All excess cash flow (after ~33% of our gross income is automatically invested throughout the month) is used to paydown my mortgage and existing HELOC balance leaving me with less than $1,000 in my checking account at all times. So I don't have $10,000 of cash laying around, but I do have availability on my HELOC.mary1492 wrote: ↑Wed Nov 03, 2021 5:07 pmWhy not simply make the $10,000 contribution over the next 6 months with no HELOC? It will all earn the 7% for the first 6 months no matter when it is contributed during that period.
For example, even if you contributed the entire $10,000 in April, for April through September that $10,000 will be earning the 7% rate for the 6 months.
It seems like a no-brainer decision, but I don't want to overlook anything.
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
I don't think you can withdraw the i-bond within first year and after 1 year lose 3 months interest if withdraw before 5 years. But I don't know what happens if you try to ask them back the money within 1 year if they just say no and ignore you.
80% VOO | 20% BND+TBILL+CASH | Don't believe Nobody because Nobody knows nothin' - Anon
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
xyzzy
Last edited by mary1492 on Tue Oct 04, 2022 3:20 am, edited 2 times in total.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
I am now planning to break some E bonds and use that to buy I Bonds in January.
Given the prospect of ongoing inflation E bonds are losing their luster even with the minimum 3.5% 20 year deal they offer.
Given the prospect of ongoing inflation E bonds are losing their luster even with the minimum 3.5% 20 year deal they offer.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
I know this doesn't apply to most people here, but my wife has student loans outstanding at ~3%. This rate change for I Bonds is a hilarious situation where we get to both receive a greater rate of return and increase our liquidity - because if we used $10,000 to pay off the loan early, we would not have access to that money in 12 months and would have saved less in interest than we'll make from the bond.
Obviously these are not the only two things we can do with the money (and there are taxes that make things more complicated), but thought I'd share our (very moderately) fortunate circumstances.
Obviously these are not the only two things we can do with the money (and there are taxes that make things more complicated), but thought I'd share our (very moderately) fortunate circumstances.
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
Is there a financial reason to not want the difference between borrowing at 3.25% and earning ~7.0%? Doesn't it make sense to earn the net 3.75% in the period it would take me to payoff the loan proceeds? The risk seems to be if I lose the ability to repay the HELOC loan AND the interest rate declines below the 3.25% interest I'm paying on it. If I'm comfortable assuming that risk, I feel like I should take that 3.75% gain ASAP but it's so easy I feel I must be missing something?
The I-Bond can't decrease in value and it's guaranteed by the USA to earn ~7% for approx. 6 months.
The I-Bond can't decrease in value and it's guaranteed by the USA to earn ~7% for approx. 6 months.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
It's early and I'm sure we'll revisit it as we approach January but what do you think will happen to the fixed rate in 2022? If it's just going to stay zero all the way through Nov. 1, then I'd buy Jan. 1.tipswatcher wrote:
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
I was lucky enough to purchase I bonds in the early 2000's. They are all paper bonds. When the time comes to redeem, is it difficult to find a local bank to redeem them or can I mail the paper bonds to the Treasury? I heard that many banks will not redeem them.
Francis
Francis
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
You might be missing that you are required to pay ordinary federal income tax on the interest when you redeem the I-bond. Depending on your bracket this might make it less attractive.Flashes1 wrote: ↑Wed Nov 03, 2021 6:15 pm Is there a financial reason to not want the difference between borrowing at 3.25% and earning ~7.0%? Doesn't it make sense to earn the net 3.75% in the period it would take me to payoff the loan proceeds? The risk seems to be if I lose the ability to repay the HELOC loan AND the interest rate declines below the 3.25% interest I'm paying on it. If I'm comfortable assuming that risk, I feel like I should take that 3.75% gain ASAP but it's so easy I feel I must be missing something?
The I-Bond can't decrease in value and it's guaranteed by the USA to earn ~7% for approx. 6 months.
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
I redeemed a few old EE bonds for my mom at Chase recently. Most big banks will handle, but you will need to be a customer and may need to call ahead.fsrph wrote: ↑Wed Nov 03, 2021 6:39 pm I was lucky enough to purchase I bonds in the early 2000's. They are all paper bonds. When the time comes to redeem, is it difficult to find a local bank to redeem them or can I mail the paper bonds to the Treasury? I heard that many banks will not redeem them.
Francis
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
Question for the group.
I opened an individual treasury direct account in my name this week, but I'm not sure how to add one my spouse. Is this done by "adding a new registration" of the buy direct page? If so, how do I label the account Sole?, primary?
I opened an individual treasury direct account in my name this week, but I'm not sure how to add one my spouse. Is this done by "adding a new registration" of the buy direct page? If so, how do I label the account Sole?, primary?
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
It might depend on where you are. I live in south central Pennsylvania, and Citizens Bank, where I redeemed a couple of found EE bonds in 2018 that were bought by my parents for me years ago (and had long since stopped earning interest), stopped redeeming savings bonds in the last year. I haven’t found any other local banks or credit unions that say they will redeem (on their websites, at least). However, I don’t have an immediate need.fsrph wrote: ↑Wed Nov 03, 2021 6:39 pm I was lucky enough to purchase I bonds in the early 2000's. They are all paper bonds. When the time comes to redeem, is it difficult to find a local bank to redeem them or can I mail the paper bonds to the Treasury? I heard that many banks will not redeem them.
I too have 1.6%-fixed-rate paper I bonds from 2003 (as well as others), and when the time comes I suppose I’ll have to turn them into Treasury Direct. I just opened an account with them, for the time when I might need them.
"I'm investing in stocks... chicken, beef, and vegetable. It's risky, but I know one day it'll pay off & I'll be a bouillonaire. Who knows, I might even open up a Broth IRA."
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
Yes, I didn't take taxes into account so that would decrease my net interest to approx. 2.6% from 3.75% (so $130 of incremental income in the next 6 months). One nice feature I like about I-Bonds is the interest is deferred until redemption them giving you more control over when taxes are due.colddeadfish wrote: ↑Wed Nov 03, 2021 6:42 pmYou might be missing that you are required to pay ordinary federal income tax on the interest when you redeem the I-bond. Depending on your bracket this might make it less attractive.Flashes1 wrote: ↑Wed Nov 03, 2021 6:15 pm Is there a financial reason to not want the difference between borrowing at 3.25% and earning ~7.0%? Doesn't it make sense to earn the net 3.75% in the period it would take me to payoff the loan proceeds? The risk seems to be if I lose the ability to repay the HELOC loan AND the interest rate declines below the 3.25% interest I'm paying on it. If I'm comfortable assuming that risk, I feel like I should take that 3.75% gain ASAP but it's so easy I feel I must be missing something?
The I-Bond can't decrease in value and it's guaranteed by the USA to earn ~7% for approx. 6 months.
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
Accounts are only in one person's name. No such thing as a "joint" account at TD.
When you purchase the bonds, you can have a "co-owner" (acts more like beneficiary though). So you could title them for "printer86 & spouse of printer86".
If you are trying to have them purchase an additional $10k, they'll need their own account. And they could title you as well.
If you both have accounts, you can optionally go into the bonds you purchased and grant spouse "transaction rights" - either view only or the ability to sell. Presumably you'd do the same in reverse with their account/bonds. This let's either of you go into your individual accounts and sell your and/or spouse bonds (assuming your granted seek rights). That's the closest you'll get to "joint".
Alternatively, you could "buy as gift" for spouse. They'll eventually need their own account to receive and/or redeem them.
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
Ok, So I'll need to open a separate account for "spouse of printer86" and add transaction rights. thanks for the help.SnowBog wrote: ↑Wed Nov 03, 2021 7:02 pmAccounts are only in one person's name. No such thing as a "joint" account at TD.
When you purchase the bonds, you can have a "co-owner" (acts more like beneficiary though). So you could title them for "printer86 & spouse of printer86".
If you are trying to have them purchase an additional $10k, they'll need their own account. And they could title you as well.
If you both have accounts, you can optionally go into the bonds you purchased and grant spouse "transaction rights" - either view only or the ability to sell. Presumably you'd do the same in reverse with their account/bonds. This let's either of you go into your individual accounts and sell your and/or spouse bonds (assuming your granted seek rights). That's the closest you'll get to "joint".
Alternatively, you could "buy as gift" for spouse. They'll eventually need their own account to receive and/or redeem them.
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
For clarity, the transaction rights are on each bond purchased. You'll need to do it for each bond bought going forward.printer86 wrote: ↑Wed Nov 03, 2021 7:06 pmOk, So I'll need to open a separate account for "spouse of printer86" and add transaction rights. thanks for the help.SnowBog wrote: ↑Wed Nov 03, 2021 7:02 pmAccounts are only in one person's name. No such thing as a "joint" account at TD.
When you purchase the bonds, you can have a "co-owner" (acts more like beneficiary though). So you could title them for "printer86 & spouse of printer86".
If you are trying to have them purchase an additional $10k, they'll need their own account. And they could title you as well.
If you both have accounts, you can optionally go into the bonds you purchased and grant spouse "transaction rights" - either view only or the ability to sell. Presumably you'd do the same in reverse with their account/bonds. This let's either of you go into your individual accounts and sell your and/or spouse bonds (assuming your granted seek rights). That's the closest you'll get to "joint".
Alternatively, you could "buy as gift" for spouse. They'll eventually need their own account to receive and/or redeem them.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
Exactly, which is why we just buy $10k of I Bonds at once annually. Set it up once and done for the year.SnowBog wrote: ↑Wed Nov 03, 2021 7:49 pmFor clarity, the transaction rights are on each bond purchased. You'll need to do it for each bond bought going forward.printer86 wrote: ↑Wed Nov 03, 2021 7:06 pmOk, So I'll need to open a separate account for "spouse of printer86" and add transaction rights. thanks for the help.SnowBog wrote: ↑Wed Nov 03, 2021 7:02 pmAccounts are only in one person's name. No such thing as a "joint" account at TD.
When you purchase the bonds, you can have a "co-owner" (acts more like beneficiary though). So you could title them for "printer86 & spouse of printer86".
If you are trying to have them purchase an additional $10k, they'll need their own account. And they could title you as well.
If you both have accounts, you can optionally go into the bonds you purchased and grant spouse "transaction rights" - either view only or the ability to sell. Presumably you'd do the same in reverse with their account/bonds. This let's either of you go into your individual accounts and sell your and/or spouse bonds (assuming your granted seek rights). That's the closest you'll get to "joint".
Alternatively, you could "buy as gift" for spouse. They'll eventually need their own account to receive and/or redeem them.
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
I have missed this thread and the opportunity to buy I bonds in October. But buying in November is still an excellent alternative. I stopped buying I bonds in 2016, forgot some facts and strategies, and would like to clarify a few points:
1. If I buy $10k worth of I bonds in November 2021 and then another $10k in January 2022, I'll have $20k of I bonds that will earn the annual 7% rate for 6 months, or about $700 (20,000 * 7% * 0.5). Right?
2. If I need cash, I can sell old I bonds that I bought with 0% fixed rate in 2011-2012. The new I bonds would replace the old I bonds while I would not have to worry about losing 3 months of interest. Is this a good strategy?
3. Question: When my I bonds will eventually mature, e.g., those I bought with the 3% fixed rate, must I cash them immediately? I may want to keep my taxable income below a certain level. Can I spread collecting interest of matured I bonds over several years?
Thank you,
Victoria
1. If I buy $10k worth of I bonds in November 2021 and then another $10k in January 2022, I'll have $20k of I bonds that will earn the annual 7% rate for 6 months, or about $700 (20,000 * 7% * 0.5). Right?
2. If I need cash, I can sell old I bonds that I bought with 0% fixed rate in 2011-2012. The new I bonds would replace the old I bonds while I would not have to worry about losing 3 months of interest. Is this a good strategy?
3. Question: When my I bonds will eventually mature, e.g., those I bought with the 3% fixed rate, must I cash them immediately? I may want to keep my taxable income below a certain level. Can I spread collecting interest of matured I bonds over several years?
Thank you,
Victoria
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
1) correctVictoriaF wrote: ↑Wed Nov 03, 2021 8:30 pm I have missed this thread and the opportunity to buy I bonds in October. But buying in November is still an excellent alternative. I stopped buying I bonds in 2016, forgot some facts and strategies, and would like to clarify a few points:
1. If I buy $10k worth of I bonds in November 2021 and then another $10k in January 2022, I'll have $20k of I bonds that will earn the annual 7% rate for 6 months, or about $700 (20,000 * 7% * 0.5). Right?
2. If I need cash, I can sell old I bonds that I bought with 0% fixed rate in 2011-2012. The new I bonds would replace the old I bonds while I would not have to worry about losing 3 months of interest. Is this a good strategy?
3. Question: When my I bonds will eventually mature, e.g., those I bought with the 3% fixed rate, must I cash them immediately? I may want to keep my taxable income below a certain level. Can I spread collecting interest of matured I bonds over several years?
Thank you,
Victoria
2) correct, since they are older than 5 years, no interest penalty. Is that a good idea? That's really up to you. You'll owe taxes on the gains from the prior I Bonds. And if you keep them, they too well be earning 6 months of interest (all I Bonds will get the 7.12% inflation rate at some point). But if you need the money, that's what they are there for.
3) no. taxes are due when you sell or when they reach their 30 year maturity. If you want to spread out the taxes, you'd start selling off some before 30 years. But again, those old I Bonds will also be getting 6 months of the 7.12% rate - or actually 10.12% given the 3% fixed (assuming they are < 30 years old).
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
Skimming through the thread, I saw this wasn't answered very thoroughly. Here is an analytical way to approach the question.billthecat wrote: ↑Wed Oct 27, 2021 12:37 pm Let's assume the fixed rate at some point increases to be higher than some of your current holdings. What would be the math to determine if you should sell (and pay taxes on accrued interest) to buy new I bonds with the higher fixed rate, or just keep what you have? Maybe the answer is 'never' and instead just buy more.
The question is, when will TIPS offer 0% real yield as an alternative to 0% fixed rate I Bonds? The optionality of I Bonds (to hedge against real yields falling or deflation) and tax advantages of I Bonds also have value, so you might want ~0.5% extra guaranteed.
Here is the current yield curve along with the (X, Y-X) forward rates expectation. X is on the vertical axis, Y is on the horizontal axis. For example, the upper left entry is the 5 year, 2 year forward real yield rate expected by the market. The market expects that TIPS issued 5 years from now with a 2-year term will earn -0.3% real.
Code: Select all
Y 5 YR 7 YR 10 YR 20 YR 30 YR
-1.66 -1.26 -0.92 -0.48 -0.27
X
5 -1.66 -0.3% -0.2% -0.1% 0.0%
7 -1.26 -0.1% -0.1% 0.0%
10 -0.92 0.0% 0.1%
20 -0.48 0.2%
Based on the current yield curve, you may never have a good reason to exchange I Bonds purchased now for another investment with a real yield like TIPS. The highest rate priced in by the market is 0.2%.
Of course, there may be other considerations. I will probably redeem my I Bonds if the rate is unfavorable at some point in the future compared to my 2.5% fixed rate mortgage.
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I-bonds: questions before purchase
[Thread merged into here --admin LadyGeek]
I have been debating purchasing I-bonds for the past couple of years, and for various reasons, I haven't purchased one before. This time, I do have cash, there are no short-term alternatives, and based on what I read in the forum recently, the I-bond rates are 7+% this year. Now that I'm ready to purchase I-bonds, I have a couple of questions:
1) Is there a way to purchase I-savings bonds, other than buying in treasury direct website?
2) The current rate of 7+% is really good. As far as I know, there are two investing periods for I-bonds, 6 months each. One was on November 1st, other is on May 1st. The rate for November 1st is 7+% right now. The question is when I purchase say 10K (max) this month, will that 10K grow at the current 7+% rate the whole time? (E.g. I'm planning to hold at least 5 years to prevent penalties, and maybe even longer) Or, does the rate change and adapt to the changing rate every 6 months?
3) I can invest 10K per year to I-savings bonds. I read about folks creating living trust, and investing another 10K there. Could you elaborate on how to create a living trust? And will I be able to access this money in the living trust after, let's say, 10 years? Or will that money just be for my heirs?
4) I-bond rates: Last couple of years, I-savings bond rates were around 2-2.5%. Now it is 7+%. I understand there is a correlation between inflation rate and I-bond rates. The rates were also high around 2000. Given this, and given that 7+% returns of I-savings bonds is rare, do you folks still invest in I-savings bonds during every 6-month period, during a time period of, let's say, as long as 20-30 years? Or do folks mainly invest in I-bonds when inflation rate is high, to catch up with inflation rate?
I have been debating purchasing I-bonds for the past couple of years, and for various reasons, I haven't purchased one before. This time, I do have cash, there are no short-term alternatives, and based on what I read in the forum recently, the I-bond rates are 7+% this year. Now that I'm ready to purchase I-bonds, I have a couple of questions:
1) Is there a way to purchase I-savings bonds, other than buying in treasury direct website?
2) The current rate of 7+% is really good. As far as I know, there are two investing periods for I-bonds, 6 months each. One was on November 1st, other is on May 1st. The rate for November 1st is 7+% right now. The question is when I purchase say 10K (max) this month, will that 10K grow at the current 7+% rate the whole time? (E.g. I'm planning to hold at least 5 years to prevent penalties, and maybe even longer) Or, does the rate change and adapt to the changing rate every 6 months?
3) I can invest 10K per year to I-savings bonds. I read about folks creating living trust, and investing another 10K there. Could you elaborate on how to create a living trust? And will I be able to access this money in the living trust after, let's say, 10 years? Or will that money just be for my heirs?
4) I-bond rates: Last couple of years, I-savings bond rates were around 2-2.5%. Now it is 7+%. I understand there is a correlation between inflation rate and I-bond rates. The rates were also high around 2000. Given this, and given that 7+% returns of I-savings bonds is rare, do you folks still invest in I-savings bonds during every 6-month period, during a time period of, let's say, as long as 20-30 years? Or do folks mainly invest in I-bonds when inflation rate is high, to catch up with inflation rate?