I Bonds Mega Thread (I Bond Heads Rejoice!)

[TwstdSista]

So current I-bonds rate is 6.89%, the new rate will come out in May 2023. It would have been better to invest at the start of the year so at least you would get 6.89% till May 2023....

FYI - An I Bond purchased between now and April will get a full six months worth of interest at the 6.89% rate. (for example, an April purchase will get 6.89% through September)

[alluringreality]

So current I-bonds rate is 6.89%, the new rate will come out in May 2023.

That's correct.

It would have been better to invest at the start of the year so at least you would get 6.89% till May 2023.

Anyone with a purchase issued between November 2022 and April 2023 will receive 6.89% for the first 6 months. Presuming the yearly purchase limit isn't an issue, it's debatable if there's any general advantage for buying in a particular month between November and April. Buying in November provides the least amount of time between inflation and payment, while buying in late April allows a buyer to know the inflation rate for the first 12 months. I'm somewhat doubtful if the Fed will let inflation run, and I'm buying for limited-term reasons, so I'm somewhat inclined to wait and see the next rates in April or October. If I was worried about the Fed allowing inflation to run high, I'd only buy in May or November, in order to limit the time between future inflation and future payments.

Then even if the rate drops to say 5-6%, you would have still beat any bank or treasury interest assuming you will lose 3 months interest when liquidating. As most of us are not going to hold it for 5 years unless the rates are high. This also assumes you don't need money for one year. Any prediction on interest rate after May?

Right now the next inflation rate is sitting at zero with three months to go. I expect the total of the next three months to be positive, but a total of 5%-6% is well above my guess. It's possible that short-term nominals could pay similar or more than I bonds in the first year.
https://tipswatch.com/tracking-inflation-and-i-bonds/

and does it make sense to invest even now? already lost a month.

There's little difference between buying in January or February. Basically the payment is simply delayed by a month with the way that I bonds work.

Also when you have to pay last 3 months interest, it would be at the rate that is going on at that time correct? and not the higher rate at which point the investment was initially initiated such as last year at 9% etc.

Yes, the penalty is always the most recent three months. The first year penalty cannot be calculated at this time, but it will be possible to calculate in late April.

[JD101]

So current I-bonds rate is 6.89%, the new rate will come out in May 2023. It would have been better to invest at the start of the year so at least you would get 6.89% till May 2023....

FYI - An I Bond purchased between now and April will get a full six months worth of interest at the 6.89% rate. (for example, an April purchase will get 6.89% through September)

I don't know if you can wait to get a better projection in April. Till then invest in some treasuries say at Vanguard that will expire in April. will have to consider the time it takes to get the money in the bank after a sale at Vanguard, the same money will be used to buy I-bonds at T-direct.

[evelynmanley]

So current I-bonds rate is 6.89%, the new rate will come out in May 2023. It would have been better to invest at the start of the year so at least you would get 6.89% till May 2023....

FYI - An I Bond purchased between now and April will get a full six months worth of interest at the 6.89% rate. (for example, an April purchase will get 6.89% through September)

I don't know if you can wait to get a better projection in April. Till then invest in some treasuries say at Vanguard that will expire in April. will have to consider the time it takes to get the money in the bank after a sale at Vanguard, the same money will be used to buy I-bonds at T-direct.

OP could also purchase treasuries from Treasury Direct that will mature in time to purchase I-Bonds at Treasury Direct, bypassing the brokerage ACH transfer hassle.

[JD101]

OP could also purchase treasuries from Treasury Direct that will expire in time to purchase I-Bonds at Treasury Direct, bypassing the brokerage ACH transfer hassle.

Thant surely will save some transfer time. Do you know if there is lag in buy and sell? I read some things are not settled for couple of days buying through brokerage?

[HueyLD]

OP could also purchase treasuries from Treasury Direct that will expire in time to purchase I-Bonds at Treasury Direct, bypassing the brokerage ACH transfer hassle.

Thant surely will save some transfer time. Do you know if there is lag in buy and sell? I read some things are not settled for couple of days buying through brokerage?

If you think you may ever want to sell before maturity, you do not want to purchase treasuries in your TD account.

You can only hold treasuries to maturity inside of TD and transferring your treasuries out of TD into a brokerage in order to sell could take many weeks.

[evelynmanley]

OP could also purchase treasuries from Treasury Direct that will expire in time to purchase I-Bonds at Treasury Direct, bypassing the brokerage ACH transfer hassle.

Thant surely will save some transfer time. Do you know if there is lag in buy and sell? I read some things are not settled for couple of days buying through brokerage?

If you think you may ever want to sell before maturity, you do not want to purchase treasuries in your TD account.

You can only hold treasuries to maturity inside of TD and transferring your treasuries out of TD into a brokerage in order to sell could take many weeks.

I personally don't purchase treasuries at Treasury Direct because of the huge (and unnecessary, IMO) hassle of having to fill out a form, get a signature from a bank, mail the form back in if I wanted to transfer Treasuries to my brokerage in order to sell. But in the OP's example, there are only a few months of holding Treasuries before purchasing I-Bonds, so that's why I mentioned TD.

[JD101]

ok so what about if you bought I-bonds, did a direct transfer from bank to Treasury direct, now when you sell it after a year and ready to give up 3 months interest, isn't it a direct transfer back to your linked account or there is more paper work involved?

[HueyLD]

ok so what about if you bought I-bonds, did a direct transfer from bank to Treasury direct, now when you sell it after a year and ready to give up 3 months interest, isn't it a direct transfer back to your linked account or there is more paper work involved?

When you redeem I bonds, you can tell TD to send the proceed back to your linked bank account.

Very easy and very fast (like overnight). Totally painless.

[krafty81]

OP could also purchase treasuries from Treasury Direct that will expire in time to purchase I-Bonds at Treasury Direct, bypassing the brokerage ACH transfer hassle.

Thant surely will save some transfer time. Do you know if there is lag in buy and sell? I read some things are not settled for couple of days buying through brokerage?

If you think you may ever want to sell before maturity, you do not want to purchase treasuries in your TD account.

You can only hold treasuries to maturity inside of TD and transferring your treasuries out of TD into a brokerage in order to sell could take many weeks.

I personally don't purchase treasuries at Treasury Direct because of the huge (and unnecessary, IMO) hassle of having to fill out a form, get a signature from a bank, mail the form back in if I wanted to transfer Treasuries to my brokerage in order to sell. But in the OP's example, there are only a few months of holding Treasuries before purchasing I-Bonds, so that's why I mentioned TD.

I have not had to do any bank stuff. Did it online.

[evelynmanley]

We're referring to the hoops that TD requires us to go through if we want to sell Treasuries before maturity. It's simple to do at a brokerage; just sell on the secondary market. But if you want to sell Treasuries at TD, TD requires a form to be filled out and a signature obtained at a bank, then mail the form back to TD and wait for the transfer.

Selling Treasury Bills
https://treasurydirect.gov/help-center/ ... ury-bills/

[Neo192]

https://www.cnbc.com/2023/02/16/produce ... 2023-.html

Maybe a sign that inflation isn't doing as well as we thought? Maybe another 6 month run for I-bonds.

[Thomas93]

[Thomas93's thread has been merged into the ongoing discussion. Thanks to the member who flagged the new thread.
-- moderator Kendall]

Does it make sense to buy series i bonds right now? Thank you.

[homebuyer6426]

Many people like them in this inflationary time. Check out the wiki page: https://www.bogleheads.org/wiki/I_savings_bonds

[Thomas93]

Thank you for the helpful reply.

That makes sense.

Series i bonds still make sense, but do series ee bonds? I'm guessing that the 20-year treasury rate now being above 3.5% makes series ee bonds undesirable at the moment?

I saw the rate was raised to 2.10% So I suppose it's a defensible investment. Less obvious than before?

[coachd50]

Does it make sense to buy series i bonds right now? Thank you.

What is your purpose? In 2021/2022 there was a benefit to short term purchases as I Bonds were paying almost 10% for the inflation component and other rates were still very low. If the fixed component stays near 0%, will the inflation component be high enough to rival other options?

If you use the search function, you will find many threads already thoroughly discussing this topic.

[Chuck]

Regarding series I - most people (including me) say let's wait until we see the March CPI number in April.
Series EE - It's not looking good unless you highly value tax deferral or guaranteed principal. (The value of an EE bond will not go down if/when interest rates go up.)

[dbr]

Whether or not it makes sense depends on your overall plan and what the other choices are for what you want to do.

In general I bonds are always sensible and in particular they (or anything else) are not recommended until you show how they fit what you are trying to do.

What are you trying to do?

[Svensk Anga]

Regarding series I - most people (including me) say let's wait until we see the March CPI number in April.

There is a window of opportunity between the mid-April CPI report for March inflation and April 30, where one can know both the first 6 months interest rate and the May 1 reset rate. If your intent is short-term, end of April is a good time to decide. TIPSwatch.com will publish his calculation of the variable rate soon after the CPI report is released. He will also have an opinion on whether the fixed rate for issue after May 1 will change and which direction, although Treasury has never revealed their basis for setting this rate so it is speculative.

If you intend to hold for a long term, the short term variable rate movements hardly matter. The chance of getting a better (or worse) real rate is of more concern.

[Ice-9]

I have been buying I-Bonds over the last two decades for one of two reasons:

(a) As an inflation-protected bond within my asset allocation of retirement assets
or
(b) As an alternative to a CD for cash emergency fund (available after 1-yr)

For much of the last decade, TIPS real yields were negative but I-Bonds' real yield was 0%, so I-Bonds had an advantage with reason (a) above. But I-Bonds purchased now have 0.4% real yield. Using TIPS to fill an allocation to inflation-linked bonds has more than 1.0% advantage of real yield, so for the asset allocation purpose I'd favor TIPS (in a tax-advantaged account) right now.

For reason (b) above, I-Bonds will earn 6.89% the first six months, which is pretty advantageous over other cash options like CDs. And I'm willing to bet inflation will still be high enough to make I-Bonds at least competitive the second six months of the required first year holding period, even after the three month penalty for withdrawing before the five-year mark. So, I think they're not a bad option for cash. As someone noted above, late April is ideal for purchasing I-bonds as a cash option, because for a short period after inflation numbers come out in mid-April, you know what it will earn for an entire year and can actually more closely compare an I-Bond purchased in late April with one-year CDs.

[Subvisual]

The big question (which nobody has answer) is whether the fixed rate on i-bonds will change with the next rate adjustment. Variable rates are almost certainly going to decrease due to recent inflation figures (which would favor buying now instead of waiting), but potentially locking in a higher fixed rate for the life of the bond might be worth waiting for.

[HueyLD]

The big question (which nobody has answer) is whether the fixed rate on i-bonds will change with the next rate adjustment. Variable rates are almost certainly going to decrease due to recent inflation figures (which would favor buying now instead of waiting), but potentially locking in a higher fixed rate for the life of the bond might be worth waiting for.

I bond variable rates are based on non-seasonably adjusted CPI-U changes between two months: March to September/September to March.

CPI-U for 09/2022 = 296.808
CPI-U for 01/2023 = 299.170

Assuming no inflation or deflation, i.e. 03/2023 CPI-U = 299.170, the next variable rate is:
(299.170 - 296.808) / 296.808 = 0.80% semiannual rate or 1.60% annualized rate.

So, the variable rate is not “almost certainly going to decrease.” However, the next composite rate will not be very eye popping like the 9.62% set in May 2022. Oh wait, maybe the Treasury will set the next fixed rate at 9%?

[Tom_T]

The big question (which nobody has answer) is whether the fixed rate on i-bonds will change with the next rate adjustment. Variable rates are almost certainly going to decrease due to recent inflation figures (which would favor buying now instead of waiting), but potentially locking in a higher fixed rate for the life of the bond might be worth waiting for.

I bond variable rates are based on non-seasonably adjusted CPI-U changes between two months: March to September/September to March.

CPI-U for 09/2022 = 296.808
CPI-U for 01/2023 = 299.170

Assuming no inflation or deflation, i.e. 03/2023 CPI-U = 299.170, the next variable rate is:
(299.170 - 296.808) / 296.808 = 0.80% semiannual rate or 1.60% annualized rate.

So, the variable rate is not “almost certainly going to decrease.” However, the next composite rate will not be very eye popping like the 9.62% set in May 2022. Oh wait, maybe the Treasury will set the next fixed rate at 9%?

The current variable rate is 6.49%, and you just predicted 1.60%. Sounds like a big decrease to me. And, the 9.62% rate was all variable, since the fixed rate was zero at the time.

Based on this morning's news, maybe inflation is not tamed after all.

[HueyLD]

I was not predicting anything. I merely presented a conservative estimation and of course my crystal ball is cloudy.

And the post before coffee in the morning can be hazardous. I mis-read sub-visual’s post thinking that he was predicting a negative inflation adjustment.

[Tom_T]

I was not predicting anything. I merely presented a conservative estimation and of course my crystal ball is cloudy.

And the post before coffee in the morning can be hazardous. I mis-read sub-visual’s post thinking that he was predicting a negative inflation adjustment.

Always drink coffee first.

[yolointopants]

I was on the fence about buying or waiting on I Bonds to prognosticate with the crystals, the dried chicken spleen, and a seance to see if I could figure the fixed rate out post May 1. Then I realized that no matter what, deep down I'm basically an idiot who does dumb things with money unless I stop myself. So I overpaid my tax refund to get $5k in I Bonds and then bought another $5k. I'll cobble together another $5k no matter what the fixed rate does and buy the rest in late April or early May and call it good. I can do a lot worse investing when I over think it than just getting a totally pure, risk free, principal protected, set it and forget it I Bond purchase taken care of before impulsive me screws up.

[Tom_T]

I was on the fence about buying or waiting on I Bonds to prognosticate with the crystals, the dried chicken spleen, and a seance to see if I could figure the fixed rate out post May 1. Then I realized that no matter what, deep down I'm basically an idiot who does dumb things with money unless I stop myself. So I overpaid my tax refund to get $5k in I Bonds and then bought another $5k. I'll cobble together another $5k no matter what the fixed rate does and buy the rest in late April or early May and call it good. I can do a lot worse investing when I over think it than just getting a totally pure, risk free, principal protected, set it and forget it I Bond purchase taken care of before impulsive me screws up.

You will have a window in April where we at least know what the new variable rate will be (but not the fixed), so you can wait and decide if you want to buy under the current rate or not. A good thing about these bonds is that you always have a lot of time to decide, provided you're not waiting until the last possible day under the old rate.

[Lyrrad]

Thank you for the helpful reply.

That makes sense.

Series i bonds still make sense, but do series ee bonds? I'm guessing that the 20-year treasury rate now being above 3.5% makes series ee bonds undesirable at the moment?

I saw the rate was raised to 2.10% So I suppose it's a defensible investment. Less obvious than before?

I sold all my series EE bonds (1-2 years after purchase) when long term rates rose last year. I bought them because they had a better yield than 20 year bonds, and as a hedge against long term rates rising. They replaced a large portion of my US Bond allocation. If I had bought 20 year Treasuries instead, they would have lost a lot of value last year. This way, I was able to reinvest in longer term bonds at a discount.

Similarly, I use I Bonds partially as a long term inflation hedge and emergency fund. Since short term nominal and long term TIPS rates have risen a lot in the past year, I think there's a good chance I'll sell most of my 0% I Bonds in December or January once the current variable rate runs out. (The 0% floor on the fixed rate makes them more interesting when long term TIPS rates go significantly below zero)

If I Bonds become attractive again, I'll consider opening trusts to buy an arbitrary amount of them.

[MKP]

https://www.cnbc.com/2023/02/16/produce ... 2023-.html

Maybe a sign that inflation isn't doing as well as we thought? Maybe another 6 month run for I-bonds.

I think they come in around 5.2% in May unless there are some big inflation surprises in the next cpi reports.

[coachd50]

https://www.cnbc.com/2023/02/16/produce ... 2023-.html

Maybe a sign that inflation isn't doing as well as we thought? Maybe another 6 month run for I-bonds.

I think they come in around 5.2% in May unless there are some big inflation surprises in the next cpi reports.

Which leads to the decision of using I bonds to chase short term yield or wait to see if the fixed rate offerings are higher for those who want to buy and hold long term.

[Tom_T]

https://www.cnbc.com/2023/02/16/produce ... 2023-.html

Maybe a sign that inflation isn't doing as well as we thought? Maybe another 6 month run for I-bonds.

I think they come in around 5.2% in May unless there are some big inflation surprises in the next cpi reports.

Which leads to the decision of using I bonds to chase short term yield or wait to see if the fixed rate offerings are higher for those who want to buy and hold long term.

You can already buy Treasuries maturing over the next 12 months that pay 5%. I Bonds always have the three-month penalty to consider if holding for under five years.

[coachd50]

https://www.cnbc.com/2023/02/16/produce ... 2023-.html

Maybe a sign that inflation isn't doing as well as we thought? Maybe another 6 month run for I-bonds.

I think they come in around 5.2% in May unless there are some big inflation surprises in the next cpi reports.

Which leads to the decision of using I bonds to chase short term yield or wait to see if the fixed rate offerings are higher for those who want to buy and hold long term.

You can already buy Treasuries maturing over the next 12 months that pay 5%. I Bonds always have the three-month penalty to consider if holding for under five years.

Yes, but in April we should know what the full 12 month variable rate will be- and the first 6 month period will be 6.89%. I agree though- I bonds are far less attractive than they were last year.

[Tom_T]

https://www.cnbc.com/2023/02/16/produce ... 2023-.html

Maybe a sign that inflation isn't doing as well as we thought? Maybe another 6 month run for I-bonds.

I think they come in around 5.2% in May unless there are some big inflation surprises in the next cpi reports.

Which leads to the decision of using I bonds to chase short term yield or wait to see if the fixed rate offerings are higher for those who want to buy and hold long term.

You can already buy Treasuries maturing over the next 12 months that pay 5%. I Bonds always have the three-month penalty to consider if holding for under five years.

Yes, but in April we should know what the full 12 month variable rate will be- and the first 6 month period will be 6.89%. I agree though- I bonds are far less attractive than they were last year.

Let's say it's 5% for argument's sake. (6.89+5)/2 = 5.95% for 12 months. But, if you sell at 12 months, you lose three months at 5%, so effectively you've earned 4.7% for 12 months. You can buy a 12-month Treasury right now that pays 5%, and there's no penalty once it matures and the income is free from state tax. Even Vanguard's VUSXX money market is paying 4.5%, and that will rise if the Fed keeps hiking. So, I don't see the scenario where I Bonds win in the short term, if that's what you're using them for.

[coachd50]

I think they come in around 5.2% in May unless there are some big inflation surprises in the next cpi reports.

Which leads to the decision of using I bonds to chase short term yield or wait to see if the fixed rate offerings are higher for those who want to buy and hold long term.

You can already buy Treasuries maturing over the next 12 months that pay 5%. I Bonds always have the three-month penalty to consider if holding for under five years.

Yes, but in April we should know what the full 12 month variable rate will be- and the first 6 month period will be 6.89%. I agree though- I bonds are far less attractive than they were last year.

Let's say it's 5% for argument's sake. (6.89+5)/2 = 5.95% for 12 months. But, if you sell at 12 months, you lose three months at 5%, so effectively you've earned 4.7% for 12 months. You can buy a 12-month Treasury right now that pays 5%, and there's no penalty once it matures and the income is free from state tax. Even Vanguard's VUSXX money market is paying 4.5%, and that will rise if the Fed keeps hiking. So, I don't see the scenario where I Bonds win in the short term, if that's what you're using them for.

I don't disagree, as evidenced by many of my posts in the "I bonds no Brainer" type threads- where I consistently point out that those talking about how their I bonds are up 400% since purchase are probably doing some readers a disservice without ALSO mentioning that they bought their bonds with a 2-3% fixed rate decades ago and that it is an apples and oranges comparison to someone buying with a 0% to near 0% fixed rate today.

[Nohbdy]

I think they come in around 5.2% in May unless there are some big inflation surprises in the next cpi reports.

Which leads to the decision of using I bonds to chase short term yield or wait to see if the fixed rate offerings are higher for those who want to buy and hold long term.

You can already buy Treasuries maturing over the next 12 months that pay 5%. I Bonds always have the three-month penalty to consider if holding for under five years.

Yes, but in April we should know what the full 12 month variable rate will be- and the first 6 month period will be 6.89%. I agree though- I bonds are far less attractive than they were last year.

Let's say it's 5% for argument's sake. (6.89+5)/2 = 5.95% for 12 months. But, if you sell at 12 months, you lose three months at 5%, so effectively you've earned 4.7% for 12 months. You can buy a 12-month Treasury right now that pays 5%, and there's no penalty once it matures and the income is free from state tax. Even Vanguard's VUSXX money market is paying 4.5%, and that will rise if the Fed keeps hiking. So, I don't see the scenario where I Bonds win in the short term, if that's what you're using them for.

I think you overlooking the advantage of the I-bond flexible redemption. What if you might need the money some time next year at a non-specific date? Like 13+ months.

If t-bill rates and CPI-U both drop, I-bonds may come out ahead of a 12 month T-bill in a timeframe of 13+ months since the I-bond rate changes trail inflation and you would need to re-invest the t-bill at some TBD rate.

I’m not making a prediction here, just pointing out that there are plausible scenarios in which I-bonds come out ahead. I’m buying both, but prefer I-bonds as a long term holding.

Also, aren’t all US treasuries’ interest exempt from state tax?

[Tom_T]

Which leads to the decision of using I bonds to chase short term yield or wait to see if the fixed rate offerings are higher for those who want to buy and hold long term.

You can already buy Treasuries maturing over the next 12 months that pay 5%. I Bonds always have the three-month penalty to consider if holding for under five years.

Yes, but in April we should know what the full 12 month variable rate will be- and the first 6 month period will be 6.89%. I agree though- I bonds are far less attractive than they were last year.

Let's say it's 5% for argument's sake. (6.89+5)/2 = 5.95% for 12 months. But, if you sell at 12 months, you lose three months at 5%, so effectively you've earned 4.7% for 12 months. You can buy a 12-month Treasury right now that pays 5%, and there's no penalty once it matures and the income is free from state tax. Even Vanguard's VUSXX money market is paying 4.5%, and that will rise if the Fed keeps hiking. So, I don't see the scenario where I Bonds win in the short term, if that's what you're using them for.

I don't disagree, as evidenced by many of my posts in the "I bonds no Brainer" type threads- where I consistently point out that those talking about how their I bonds are up 400% since purchase are probably doing some readers a disservice without ALSO mentioning that they bought their bonds with a 2-3% fixed rate decades ago and that it is an apples and oranges comparison to someone buying with a 0% to near 0% fixed rate today.

I hopped on board late 2021, and then more in early 2022, to get the no-brainer rates -- but at this point I am past the 12-month mark, and I don't think I'll be keeping them another year. Another factor is that I don't want to deal with the whole Treasury Direct layer forever. I've got enough fixed income options in my Fidelity account, and it's simpler

[coachd50]

You can already buy Treasuries maturing over the next 12 months that pay 5%. I Bonds always have the three-month penalty to consider if holding for under five years.

Yes, but in April we should know what the full 12 month variable rate will be- and the first 6 month period will be 6.89%. I agree though- I bonds are far less attractive than they were last year.

Let's say it's 5% for argument's sake. (6.89+5)/2 = 5.95% for 12 months. But, if you sell at 12 months, you lose three months at 5%, so effectively you've earned 4.7% for 12 months. You can buy a 12-month Treasury right now that pays 5%, and there's no penalty once it matures and the income is free from state tax. Even Vanguard's VUSXX money market is paying 4.5%, and that will rise if the Fed keeps hiking. So, I don't see the scenario where I Bonds win in the short term, if that's what you're using them for.

I don't disagree, as evidenced by many of my posts in the "I bonds no Brainer" type threads- where I consistently point out that those talking about how their I bonds are up 400% since purchase are probably doing some readers a disservice without ALSO mentioning that they bought their bonds with a 2-3% fixed rate decades ago and that it is an apples and oranges comparison to someone buying with a 0% to near 0% fixed rate today.

I hopped on board late 2021, and then more in early 2022, to get the no-brainer rates -- but at this point I am past the 12-month mark, and I don't think I'll be keeping them another year. Another factor is that I don't want to deal with the whole Treasury Direct layer forever. I've got enough fixed income options in my Fidelity account, and it's simpler

I did the same as you. Depending on the new fixed rate, I am not sure what I will do going forward. My purpose for I bonds is most likely as a store of value for a very likely future purpose (such as knowing I have a 10 year old vehicle, but with only 100,000 miles and so I will likely need to buy a new car in the next 8-10 years or so. Or knowing I have aging appliances etc.)

[impatientInv]

Fixed rate was 0.4% in November, my guess it would be between 0.6-1.0% in May. Especially if the variable rate drops and real rate continues to stay high.

Code: Select all

Numbers below are approx
Real Yield.Now.     6 months average
10Y TIPs  1.518%.      > 1.4%
20Y TIPs. 1.51%.       > 1.4%
Real Yield. Nov 2022.   6 months average
10Y TIPs  1.58%.      < 0.8%
20Y TIPs. 1.7%.        < 0.8%

https://www.cnbc.com/quotes/US10YTIP
https://ycharts.com/indicators/20_year ... rity_rate

The table below from Tipswatch is great, but it is missing 6month/1 year average real rates.


Edit: In the table above, I think the May-08 to May-10 can be ignored as Fed had cut rates to zero and the Great Recession.. May 17 to Nov-19 can be instructive.. I-Bond fixed rate was raised to 0.5% while the average TIPs real yield was <0.9%. So hopefully May fixed rate will be higher.

[yolointopants]

Fixed rate was 0.4% in November, my guess it would be between 0.6-1.0% in May. Especially if the variable rate drops and real rate continues to stay high.

.6+ would be spicy. I'll back the truck up on that.

[theac]

Fixed rate was 0.4% in November, my guess it would be between 0.6-1.0% in May. Especially if the variable rate drops and real rate continues to stay high.

.6+ would be spicy. I'll back the truck up on that.

Yep, I'll also be waiting till late April to decide if I'll be buying in at the present rate, or the new May 1st rate.

Either way, I'm not interested in "quick fixes."
So all the "1-year" and "penalties" talk means nothing to me.

For me, it's just one more place to store some extra cash with no worries attached!

[SuperTrooper87]

Fixed rate was 0.4% in November, my guess it would be between 0.6-1.0% in May. Especially if the variable rate drops and real rate continues to stay high.

.6+ would be spicy. I'll back the truck up on that.

Yep, I'll also be waiting till late April to decide if I'll be buying in at the present rate, or the new May 1st rate.

Either way, I'm not interested in "quick fixes."
So all the "1-year" and "penalties" talk means nothing to me.

For me, it's just one more place to store some extra cash with no worries attached!

What will you be looking for come april to signal that it may be higher?

[theac]

Fixed rate was 0.4% in November, my guess it would be between 0.6-1.0% in May. Especially if the variable rate drops and real rate continues to stay high.

.6+ would be spicy. I'll back the truck up on that.

Yep, I'll also be waiting till late April to decide if I'll be buying in at the present rate, or the new May 1st rate.

Either way, I'm not interested in "quick fixes."
So all the "1-year" and "penalties" talk means nothing to me.

For me, it's just one more place to store some extra cash with no worries attached!

What will you be looking for come april to signal that it may be higher?

I don't know, will just wait till we get there.
Then will see what the Boglehead consensus is.

[impatientInv]

Fixed rate was 0.4% in November, my guess it would be between 0.6-1.0% in May. Especially if the variable rate drops and real rate continues to stay high.

.6+ would be spicy. I'll back the truck up on that.

Yep, I'll also be waiting till late April to decide if I'll be buying in at the present rate, or the new May 1st rate.

Either way, I'm not interested in "quick fixes."
So all the "1-year" and "penalties" talk means nothing to me.

For me, it's just one more place to store some extra cash with no worries attached!

What will you be looking for come april to signal that it may be higher?

https://www.cnbc.com/quotes/US10YTIP
https://ycharts.com/indicators/20_year_ ... urity_rate

My guess is will depend on following
1. Average 6 month and 1 year real rate for 10 year and 20 year TIPS
2. Fed continues with policy of higher interest rate for longer, no cuts expected.
3. No recession imminent (no rate cuts expected soon)

If they repeat what they did during May 2017 to Nov 2019, fixed rate should be >> 0.6%, surely >0.4%. As I plan to hold iBonds for many years, will be buying in May and maybe again in November.

Guessing game for May fixed rate?
My guess 0.8%

[delrinson]

I started out in the chasing yield camp but am migrating a bit toward long-term inflation protected camp. Our current portfolio has 80k sitting in our gift boxes with last delivery in 2026...plus 40k sitting in our accounts. I'm fine with that regardless of what happens to rates going forward.

Contemplating whether or not to buy another 20k in April.

Oct-Jan inflation has been very low...we'll see what Feb and Mar bring. But if it stays low for the full six months (translating into a new low variable rate), that would make for a somewhat uninspiring blended yield over 12 months. However, I do wonder if, for a variety of reasons, the inflation data over the last four months has been depressed because of transient factors....and if inflation will spike more April through Sept, resulting in a higher November variable rate. So, even if I continue to be a yield chaser, six months of low returns may turn out to be not so bad in the overall scheme of things.

[delrinson]

Has anyone "tested," either intentionally or unintentionally, exceeding the $10,000 annual limit with a combination of purchase and gift reception? If I purchase a $10,000 bond and then, a few months later, someone gifts me a $10,000 bond, what would the system do?

Wouldn't want to risk it...but I am curious.

[GP813]

Has anyone "tested," either intentionally or unintentionally, exceeding the $10,000 annual limit with a combination of purchase and gift reception? If I purchase a $10,000 bond and then, a few months later, someone gifts me a $10,000 bond, what would the system do?

Wouldn't want to risk it...but I am curious.

That won't work. If somebody has purchased an I Bond to gift you, while it's sitting in their gift box it's still gaining interest. If you want an extra I bond you can open a trust with your social security number and that is allowed but won't be under the same account.

[e5116]

I started out in the chasing yield camp but am migrating a bit toward long-term inflation protected camp. Our current portfolio has 80k sitting in our gift boxes with last delivery in 2026...plus 40k sitting in our accounts. I'm fine with that regardless of what happens to rates going forward.

Contemplating whether or not to buy another 20k in April.

Oct-Jan inflation has been very low...we'll see what Feb and Mar bring. But if it stays low for the full six months (translating into a new low variable rate), that would make for a somewhat uninspiring blended yield over 12 months. However, I do wonder if, for a variety of reasons, the inflation data over the last four months has been depressed because of transient factors....and if inflation will spike more April through Sept, resulting in a higher November variable rate. So, even if I continue to be a yield chaser, six months of low returns may turn out to be not so bad in the overall scheme of things.

Seems like the Feds don't think inflation is yet tamed....

I'm debating if I hold onto my existing I Bonds with high variable rates (but 0 fixed rate) or buy new I bonds in May with likely ~0.7-1% fixed rates and sell off my existing i bonds when the variable rate plunges....Or keep both. I Bonds could now become part of my bond portfolio going forward even though I first entered in late 2021. Seems like a lot of folks are using I bonds as a relatively short-term play because of the high inflation period. I have some in my gift box to consider as well. I do like the stability but conditions have changed that also make other fixed income options more desirable now than they were a year or so ago.

[theac]

I have some old 0% fixed I-Bonds (past the 5 years),
and I'll just buy new ones this year.

I won't be getting rid of those old ones until the composite rate drops way down from its present levels. Otherwise I'll probably just keep those 0% I-Bonds.

[billthecat]

I'm debating if I hold onto my existing I Bonds with high variable rates (but 0 fixed rate) or buy new I bonds in May with likely ~0.7-1% fixed rates and sell off my existing i bonds when the variable rate plunges....Or keep both. I Bonds could now become part of my bond portfolio going forward even though I first entered in late 2021. Seems like a lot of folks are using I bonds as a relatively short-term play because of the high inflation period. I have some in my gift box to consider as well. I do like the stability but conditions have changed that also make other fixed income options more desirable now than they were a year or so ago.

If you don't buy in April, why would you buy in May? Wouldn't you wait until October to see what expectations are for November (and then either buy in October or November)?

[Darth Xanadu]

I'm debating if I hold onto my existing I Bonds with high variable rates (but 0 fixed rate) or buy new I bonds in May with likely ~0.7-1% fixed rates and sell off my existing i bonds when the variable rate plunges....Or keep both. I Bonds could now become part of my bond portfolio going forward even though I first entered in late 2021. Seems like a lot of folks are using I bonds as a relatively short-term play because of the high inflation period. I have some in my gift box to consider as well. I do like the stability but conditions have changed that also make other fixed income options more desirable now than they were a year or so ago.

If you don't buy in April, why would you buy in May? Wouldn't you wait until October to see what expectations are for November (and then either buy in October or November)?

For me personally, I had planned on buying as soon as I could get the spare cash, with the goal of doing so before May. However, I'm now leaning towards waiting until after the May 1 reset, given that there seems to be some consensus that the fixed rate is unlikely to go down (see this recent article from TipsWatch https://tipswatch.com/2023/03/09/i-bond ... ate-reset/).

If the fixed rate goes even higher on the November 1 reset, I can purchase in the new year and capture that, as well. It seems like a good balance to me, especially if one expects the variable rate to continue to decrease over time.