Add to Taxable or Buy I-Bonds?

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PhinanceMD
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Add to Taxable or Buy I-Bonds?

Post by PhinanceMD »

@age 40 (federal 37%, state 9.9%)- plan to retire at 50, am I better off expanding my tax deferral space with I-Bond purchasing (no federal taxes till redeemed) or continuing to add to my taxable space? (I am already maxing out 401K + Cash balance plan + backdoor IRA + HSA) :sharebeer
Last edited by PhinanceMD on Sun Dec 11, 2022 3:32 pm, edited 6 times in total.
60/30/10
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vineviz
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Re: TIPS vs IBONDS

Post by vineviz »

PhinanceMD wrote: Thu Dec 08, 2022 2:45 pm Hi all,

My AA is slightly down on bonds, for past 2 years I have purchased max IBONDs for family (10K per). I recently learned I have access to Vanguard Inflation-Protected Securities Fund Investor Shares (VIPSX) in my HSA (~30K in value). Currently HSA is Total US Market Stock. Is it wrong to switch out of all equities in an HSA since it’s a never tax retirement vehicle (Assuming we use it for medical expenses). How do you make the decision between after tax IBONDS vs pre-never-tax TIPS in HSA? Thx in advance.
The most tax efficient solution would probably be to keep the HSA in stocks and simply buy more savings bonds (since this is effectively “extra” tax-deferred space.

Depending on circumstances, don’t overlook the Series EE savings bonds as an option in addition to Series I.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
Hola
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Re: TIPS vs IBONDS

Post by Hola »

vineviz wrote: Thu Dec 08, 2022 2:59 pm
Depending on circumstances, don’t overlook the Series EE savings bonds as an option in addition to Series I.
Can you share more what those circumstances might be? EE don’t get as much love as Series I and I want to understand why. I understand the mechanisms of how each work but I’d like to hear what use case you had in mind considering the OP was asking about inflation protection and placement efficiency.
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PhinanceMD
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Re: TIPS vs IBONDS

Post by PhinanceMD »

Thank you, I have never thought of this as opening up “more tax deferred space”, very helpful. I’m assuming tax treatment is the same for EE and I Bonds, defer federal taxes until it’s cashed out, and no state or local?
vineviz wrote: Thu Dec 08, 2022 2:59 pm
PhinanceMD wrote: Thu Dec 08, 2022 2:45 pm Hi all,

My AA is slightly down on bonds, for past 2 years I have purchased max IBONDs for family (10K per). I recently learned I have access to Vanguard Inflation-Protected Securities Fund Investor Shares (VIPSX) in my HSA (~30K in value). Currently HSA is Total US Market Stock. Is it wrong to switch out of all equities in an HSA since it’s a never tax retirement vehicle (Assuming we use it for medical expenses). How do you make the decision between after tax IBONDS vs pre-never-tax TIPS in HSA? Thx in advance.
The most tax efficient solution would probably be to keep the HSA in stocks and simply buy more savings bonds (since this is effectively “extra” tax-deferred space.

Depending on circumstances, don’t overlook the Series EE savings bonds as an option in addition to Series I.
60/30/10
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