I Bonds Mega Thread (I Bond Heads Rejoice!)

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

Post by SnowBog »

+1
Mel Lindauer wrote: Wed Mar 29, 2023 6:08 pm 1. Putting all your eggs in one basket (as with TD), you're taking on risk that can be diversified away by having some paper I Bonds if/when the TD site is down or you're locked out and trying to get back in. And, having both options, if you can't find a bank to redeem the paper ones, you still have TD to fall back on. Nice to have choices.
2. Actually, while you and others here seem to focus on the low odds of TD getting hacked, TD is worried about someone cleaning out your TD account using YOUR login info, so they specifically state that they won't make you whole if that happens. So folks need to focus on protecting that avenue (possibly even more) as much as worrying about TD being hacked since most posts on this topic (like yours) seem to focus on the low odds of TD getting hacked and don't even mention the other way.
Respectfully, how is this any different than most online brokerages (or most anything online)? No one - that I know of - offers a "no questions asked" protection.

Should I withdraw a pile of cash to keep in my house vs. keeping it someplace like Fidelity? Do you split up your investments, keeping some at Vanguard, some at Fidelity, some at Schwab - just to avoid "putting lots of your eggs" in the same basket?

Using Fidelity as an example, looking through their "customer protection guarantee" [below - emphasis mine], I bet you lots of people might not "actually" have the protection they think. Afterall, many people recommend "not regularly looking at" their accounts, don't use unique usernames or passwords, don't report lost/stolen devices to Fidelity, and might even "share" their login details with others. Even if their username and password was stolen by a phishing attack, the attacker could argue that you "shared" your password with them - and how could you prove otherwise. Thus, Fidelity could claim that anyone who doesn't follow every item correctly isn't covered. I've never seen a report or incident where that was the case, but I mean they could right?

By the same view, I've never heard of anyone having an issue with someone hacking into their Treasury Direct account and losing money. That isn't to say it's not possible. Nor to say that Treasury Direct might decide to just say "too bad".

For what its worth, this is why I actively monitor all of my accounts - and use aggregators like Mint to do so - even though one could argue doing so violates the protections since that's arguably "sharing" and/or "authorizing" someone else. The reality is I can regularly check something like Mint and within a few seconds validate no unauthorized transactions happened across all of my monitored accounts. And if there is an issue, I'll see it within days (or hours as if it's a large amount it will set off my alerts) - which should be enough time to reach out and take action. (By contrast - there is no way I'd be able to check my accounts - especially ones like TD with the horrible virtual keyboard - "regularly", meaning I'd actually be "less protected" if I didn't use an aggregator - as I'm less likely to notice suspect/unauthorized activity - and more likely to "miss my window" to report those events.)

Taking that one step further, if someone hacked my TD account, they could sell my existing bonds - and the cash would show up in my linked bank account. They'd have to compromise my bank account in order to get the money anywhere else where they could use it. And when I see those notices, even if its too late for TD to do anything, I can contact my back and report the transaction to move the money elsewhere as unauthorized/fraudulent, much the same as an unauthorized debit charge or ACH pull. And if someone tried to add a new "linked" account - I'd see those notices too... So, they'd have to wait until I'm incapacitated or traveling abroad in an area without internet where I wouldn't see those notices. Again, this isn't a "new" or "unique" situation with TD - that's the reality for pretty much all of our online accounts.

https://www.fidelity.com/security/custo ... -guarantee
What actions must I take to be eligible?
To be eligible for coverage under the Customer Protection Guarantee, you must frequently check your account information and promptly review correspondence, account statements, confirmations, and alerts as they are made available to you, but no later than 30 days after that information is posted to your account or delivered to you. You must immediately contact and report to Fidelity by calling 800-544-6666 if you suspect any unauthorized account activity, errors, or discrepancies, if you lose the device you normally use to contact us, or if you have not received your account statements. You must also maintain up-to-date contact information with us so that you can receive timely account communications and to ensure that we can contact you in case of suspected unauthorized activity.

What must I do to protect my accounts?
Use a unique username and password when setting up online credentials. Change your password and notify us immediately if you become aware that you are the victim of identity theft. Actively monitor your accounts and never share your account access information, including username, password, and answers to security questions, with anyone, or grant someone else access to your account. You should also never grant remote access to your computer or readback a one-time security password unless you have initiated the service call to a phone number that you have verified to be valid. Fidelity will never contact you to ask for this information or to gain access to your computer. You should visit our security https://www.fidelity.com/security or on NetBenefits to learn more about ways to protect yourself.

What are examples of when I won't be covered?
If you grant access or authority to, or share your Fidelity account access credentials or information with, any persons or entities, their activity will be considered authorized by you and not covered by the Customer Protection Guarantee. Losses of cash, securities, or digital assets transferred to outside accounts that are beneficially owned by you are not covered by the Customer Protection Guarantee. Also not covered is any activity by an employer/plan administrator, financial intermediary, or third-party who is authorized by you to access your data (or who received your data as a result of that access), or with whom you've shared or provided access to your username, password, or account number, or from malware or a breach of security that affects the systems of any of those parties. If you direct us to share account access information about you or your accounts with any third-party, the Customer Protection Guarantee does not cover any losses or activity resulting from the sharing of that information, including any misuse or theft of that information from a third-party.
To be clear, I get the "benefits" of paper bonds. To me, it's amazing that they'll replace them, for effectively any reason, no questions asked (OK, you gotta fill out the right forms/paperwork). I get that's better than what TD offers, better than what Fidelity offers, better than probably every online brokerage offers. But that doesn't change that I need to use an online brokerage, and if I need/want more than $5k a year in I Bonds I need to use TD.
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Mel Lindauer
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Mel Lindauer »

^^^To be perfectly clear, I was simply addressing the fact that every post I see on the forum about possible losses from hacks focuses on the extremely low possibility of TD getting hacked. I have yet to see a single post where someone realizes that there may well be a higher risk that their personal account gets hacked and the hacker then changes the bank account and cleans out their TD account.

I'm simply trying to get folks to understand that they need to pay more attention to the part of the hack that they can control, and that's their personal accounts.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by theac »

legalwriter1 wrote: Wed Mar 29, 2023 10:18 am
greenspam wrote: Wed Mar 29, 2023 9:20 am Just a quick note; a month after 9/11 had occurred (oct 2001), seeking a 'safe' investment, and taking advice on this forum from the i-bond crew (ML, TL?), I invested $27K in i-bonds...

current value: $85.7K WOW !!!
current interest rate: 12.76%

pretty darn good investment,

except i suppose the actual value of the $85.7K is gonna be reduced by about 15-25% by federal taxes (state too???), depending on if/when I cash them...

Any suggestions on how to reduce tax burden on these? my present strategy is to hold as long as possible and cash in during a year when I'm retired and earning much less than now.

thanks all
By comparison, if you invested $27k in the S&P 500 in Oct 2001 and reinvested all dividends, you would have around $139k in October 2022 (8.1% annual return not adjusted for inflation or 5.5% annual return adjusted for inflation). I still love my I-bonds, but it's still good to be in the market and diversify.
People often look at things only on the surface, and often, AFTER the dangers are gone and they have been one of the lucky ones who survived.

I'd bet most people who had those $27,000 in I-Bonds over those years--and for example, during the turbulent REAL TIME MOMENTS along the way (such as around 2007 and 2008)--had far less sleepless nights, and far less stressful waking hours, than those who had their $27,000 dwindling before their eyes, with no guarantee (Federal or otherwise) to assure them that they'd ever be made whole again.

Then you have to factor in those HUMANS, who acted like humans under pressure, and made the wrong move (in retrospect), and sold low, or worse still, were FORCED TO SELL for whatever reason, without even having a choice.

Too many variables in these kinds of things to assume that just because one person got lucky and didn't panic, to assume that everybody did the same thing. There was no doubt a lot of blood left on the streets for those who were in stocks during those years, even for those in the "safety" of the S+P 500.

Some have survived, and many have not. And of course, we don't get to hear from those that did not. Financial pressures can cause divorces and ruin lives in many ways too vast to list. Life is not always just about how many dollars you end up with in the end, because sometimes the price you have to pay for those dollars was not worth it. It really does come down to a case by case basis.

Sort of like in Vegas. Slot machines are set up to flash bright lights and make a lot of noise to get everybody's attention, when one person wins. Can you imagine how noisy a casino would be if the slot machines were set to make a lot of noise every time someone loses? You'd probably have to wear ear protection to keep from going deaf! :D

To me, you can't put a dollar amount on peace of mind, or on a good night's sleep.
Of course we all have differing priorities, and what we will risk to get to them. :sharebeer
"We keep you alive to serve this ship. Row well...and live." Ben Hur...and The Taxman! hahaha (a George Harrison song)
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Mel Lindauer
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Mel Lindauer »

Comparing equities to I Bonds is a wasted exercise that has no meaning. Bonds are bonds and equities are equities; they're two different animals and serve two different functions in one's portfolio. The only part folks need to worry about is what preferred percentage of each they should own.

I Bonds fit in the bond category and should be compared to other risk-free bond options, not to equities. All that matters to each investor is what they chose for an asset allocation that made them comfortable and how that choice worked out for them. What others did or didn't do is totally irrelevant. Coulda, woulda, shoulda has zero value.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by coachd50 »

Mel Lindauer wrote: Wed Mar 29, 2023 11:44 pm Comparing equities to I Bonds is a wasted exercise that has no meaning...
Coulda, woulda, shoulda has zero value.
Correct. But also Comparing I bonds bought almost a quarter century ago with a 3% (or greater) fixed rate to I bonds bought in the present with zero or near zero fixed rates is also a wasted exercise isn't it?

In this case, the post talking about the equity returns was in reply to someone posting about the returns on their I bonds purchased 22 years ago. As the circumstances surrounding that purchase are vastly different than today's opportunities, I would suggest that both posts are quite similar in their lack of value to current decision making
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by greenspam »

Coachd50 wrote:
“…In this case, the post talking about the equity returns was in reply to someone posting about the returns on their I bonds purchased 22 years ago. As the circumstances surrounding that purchase are vastly different than today's opportunities, I would suggest that both posts are quite similar in their lack of value to current decision making”

My post was to request advice about minimizing taxes on my ibonds, hence, very relevant to my current decision making & perhaps too for others in my situation. [Inappropriate comment removed. Moderator Pops1860]
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Chuck »

greenspam wrote: Thu Mar 30, 2023 8:25 am My post was to request advice about minimizing taxes on my ibonds, hence, very relevant to my current decision making & perhaps too for others in my situation. [Inappropriate comment removed. Moderator Pops1860]
Generally, all your interest is going to be taxed as income on the federal level (exempt from state and local tax). If you can use the proceeds to pay for a qualified education expense (https://www.treasurydirect.gov/savings- ... education/) that would avoid taxation. Rolling into a 529 is apparently one method. There are AGI limits. Otherwise I think you just have to spread out the redemptions over multiple years to avoid hitting any phaseouts or unwanted brackets, or wait until you retire in a lower bracket, keeping in mind that when it matures after 30 years, the tax is due. If that is not your ideal timing, you'll have to make sure you've handled it before the 30-year mark.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Pops1860 »

Please remember forum rule on civility:
Discussions are about issues, not people. If you disagree with an idea, go ahead and marshal all your forces against it. But do not confuse ideas with the person posting them. At all times we must conduct ourselves in a respectful manner to other posters.
Thank you. Moderator Pops1860
The power of accurate observation is often called cynicism by those who do not have it. ~George Bernard Shaw
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Mel Lindauer »

coachd50 wrote: Thu Mar 30, 2023 5:27 am
Mel Lindauer wrote: Wed Mar 29, 2023 11:44 pm Comparing equities to I Bonds is a wasted exercise that has no meaning...
Coulda, woulda, shoulda has zero value.
Correct. But also Comparing I bonds bought almost a quarter century ago with a 3% (or greater) fixed rate to I bonds bought in the present with zero or near zero fixed rates is also a wasted exercise isn't it?

In this case, the post talking about the equity returns was in reply to someone posting about the returns on their I bonds purchased 22 years ago. As the circumstances surrounding that purchase are vastly different than today's opportunities, I would suggest that both posts are quite similar in their lack of value to current decision making
As has been correctly pointed out, there was no comparison between old and new I Bonds as you claimed. Rather, it was about paying taxes on his old I Bonds.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Samosa22 »

SnowBog wrote: Wed Mar 29, 2023 7:23 pm ....
For what its worth, this is why I actively monitor all of my accounts - and use aggregators like Mint to do so - even though one could argue doing so violates the protections since that's arguably "sharing" and/or "authorizing" someone else. The reality is I can regularly check something like Mint and within a few seconds validate no unauthorized transactions happened across all of my monitored accounts. And if there is an issue, I'll see it within days (or hours as if it's a large amount it will set off my alerts) - which should be enough time to reach out and take action. (By contrast - there is no way I'd be able to check my accounts - especially ones like TD with the horrible virtual keyboard - "regularly", meaning I'd actually be "less protected" if I didn't use an aggregator - as I'm less likely to notice suspect/unauthorized activity - and more likely to "miss my window" to report those events.)

Taking that one step further, if someone hacked my TD account, they could sell my existing bonds - and the cash would show up in my linked bank account. They'd have to compromise my bank account in order to get the money anywhere else where they could use it. And when I see those notices, even if its too late for TD to do anything, I can contact my back and report the transaction to move the money elsewhere as unauthorized/fraudulent, much the same as an unauthorized debit charge or ACH pull. And if someone tried to add a new "linked" account - I'd see those notices too... So, they'd have to wait until I'm incapacitated or traveling abroad in an area without internet where I wouldn't see those notices. Again, this isn't a "new" or "unique" situation with TD - that's the reality for pretty much all of our online accounts.
....
Are you able to link TD to mint? I attempted once but couldn't link it, haven't re-tried yet.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Chuck »

Samosa22 wrote: Thu Mar 30, 2023 2:50 pm Are you able to link TD to mint? I attempted once but couldn't link it, haven't re-tried yet.
Based on what I've read regarding how hard it is to get your TD account unlocked, I wouldn't even consider it.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by SnowBog »

Samosa22 wrote: Thu Mar 30, 2023 2:50 pm
SnowBog wrote: Wed Mar 29, 2023 7:23 pm ....
For what its worth, this is why I actively monitor all of my accounts - and use aggregators like Mint to do so...
....
Are you able to link TD to mint? I attempted once but couldn't link it, haven't re-tried yet.
Sadly no...

But eMoney works with TD, so I have our TD accounts linked into Fidelity Full View, as well as through Plan vision, as both use eMoney.

Oddly, the opposite is true with one of our workplace accounts where eMoney can't link to it, but Mint does.

In other words, I can look in one of 2 places to see > 95% of our accounts/transactions, and across both combined effectively 100% coverage.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by SnowBog »

Chuck wrote: Thu Mar 30, 2023 3:18 pm
Samosa22 wrote: Thu Mar 30, 2023 2:50 pm Are you able to link TD to mint? I attempted once but couldn't link it, haven't re-tried yet.
Based on what I've read regarding how hard it is to get your TD account unlocked, I wouldn't even consider it.
Been doing it via eMoney for years, haven't had an issue yet...

As with other accounts, you do occasionally need to refresh the connection.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Mudpuppy »

CletusCaddy wrote: Wed Mar 29, 2023 10:51 am Do you keep the paper at your house? Safe deposit box? Under mattress?
Similar to another poster, I keep my paper bonds in a fireproof safe in my house (which is usually locked, since I'm rarely needing to access it). I also keep the serial numbers, issue date, initial amount, etc. listed in my spreadsheet as part of my I-Bond tracking. That also gives me the data necessary to recover the bonds should they be stolen or destroyed. The spreadsheet is encrypted and backed up to protect the information.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by WarAdmiral »

Assumption: If i had originally invested $10K in I-Bonds and it grew to $16K

Question: If i want to withdraw 5K, can i choose if this 5K comes out from the principal portion (no tax) or the interest portion (Federal Tax) ?
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by SnowBog »

WarAdmiral wrote: Fri Mar 31, 2023 11:04 pm Assumption: If i had originally invested $10K in I-Bonds and it grew to $16K

Question: If i want to withdraw 5K, can i choose if this 5K comes out from the principal portion (no tax) or the interest portion (Federal Tax) ?
No. It's prorated.
Last edited by SnowBog on Sat Apr 01, 2023 12:18 am, edited 1 time in total.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by placeholder »

WarAdmiral wrote: Fri Mar 31, 2023 11:04 pm Assumption: If i had originally invested $10K in I-Bonds and it grew to $16K

Question: If i want to withdraw 5K, can i choose if this 5K comes out from the principal portion (no tax) or the interest portion (Federal Tax) ?
How much can I cash at one time?

Any amount of $25 or more to the penny.
If you cash only part of what a bond is worth, you must leave at least $25 in your account.
If you cash only part of what a bond is worth, you get the interest only on the part you cash.
https://www.treasurydirect.gov/savings- ... ng-a-bond/
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by billthecat »

SnowBog wrote: Sat Apr 01, 2023 12:05 am
WarAdmiral wrote: Fri Mar 31, 2023 11:04 pm Assumption: If i had originally invested $10K in I-Bonds and it grew to $16K

Question: If i want to withdraw 5K, can i choose if this 5K comes out from the principal portion (no tax) or the interest portion (Federal Tax) ?
No. It's prorated.
In anticipation of wanting to redeem at some point, I have all my I bonds dumped into a table, and then have a pivot table on that, that shows me the bonds that are sellable (older than a year) with a fixed rate of zero, sorted by composite rate then by percent gain. The idea being I would sell first the ones with the lowest composite rate with the lowest percent gain.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by SnowBog »

billthecat wrote: Sat Apr 01, 2023 2:27 pm
SnowBog wrote: Sat Apr 01, 2023 12:05 am
WarAdmiral wrote: Fri Mar 31, 2023 11:04 pm Assumption: If i had originally invested $10K in I-Bonds and it grew to $16K

Question: If i want to withdraw 5K, can i choose if this 5K comes out from the principal portion (no tax) or the interest portion (Federal Tax) ?
No. It's prorated.
In anticipation of wanting to redeem at some point, I have all my I bonds dumped into a table, and then have a pivot table on that, that shows me the bonds that are sellable (older than a year) with a fixed rate of zero, sorted by composite rate then by percent gain. The idea being I would sell first the ones with the lowest composite rate with the lowest percent gain.
You may also want to adjust for the 5-year penalty, bonds less than that lose the last 3 months interest. However, if you are pulling the values from TD, or another source that already applies that "penalty", then you are good to go.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Mel Lindauer »

Depending on your tax situation, you may want to consider redeeming some of the bonds over several years just prior to the 30-year mark to minimize the tax hit.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by zero_coupon »

Question regarding swapping between cash and accrual accounting of I Bond interest (i.e. can you keep flipping between methods 1 and 2 without restriction?):
sscritic wrote: Thu Dec 29, 2011 9:18 pm For the change from [accounting method ] 2 to 1, one of the requirements is a promise you make to the IRS.
5. It includes your agreement to:
a. Report all interest on any bonds acquired during or after the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, and
b. Report all interest on the bonds acquired before the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, with the exception of the interest reported in prior tax years.
There's your limit. If you own bonds and switch from 2 to 1, you must promise never to switch again, not for these bonds and not for any new bonds (since all bonds must be reported using the same method).
But must this agreement really remain in force until all one's savings bonds mature, without any ability to change back to method 2? There's nothing saying it can't be reversed by switching back to the cash accounting method (method 2), which one can do without requesting permission. It seems the language is just expressing how the accrual method (which is in force for new bonds, by default) works -- i.e. you report interest and pay taxes upon disposing of the bonds.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by toddthebod »

zero_coupon wrote: Tue Apr 04, 2023 9:39 am Question regarding swapping between cash and accrual accounting of I Bond interest (i.e. can you keep flipping between methods 1 and 2 without restriction?):
sscritic wrote: Thu Dec 29, 2011 9:18 pm For the change from [accounting method ] 2 to 1, one of the requirements is a promise you make to the IRS.
5. It includes your agreement to:
a. Report all interest on any bonds acquired during or after the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, and
b. Report all interest on the bonds acquired before the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, with the exception of the interest reported in prior tax years.
There's your limit. If you own bonds and switch from 2 to 1, you must promise never to switch again, not for these bonds and not for any new bonds (since all bonds must be reported using the same method).
But must this agreement really remain in force until all one's savings bonds mature, without any ability to change back to method 2? There's nothing saying it can't be reversed by switching back to the cash accounting method (method 2), which one can do without requesting permission. It seems the language is just expressing how the accrual method (which is in force for new bonds, by default) works -- i.e. you report interest and pay taxes upon disposing of the bonds.
There does not appear to be an explicit restriction on switching between methods.
https://www.irs.gov/publications/p550#e ... nk10009904
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by zero_coupon »

zero_coupon wrote: Tue Apr 04, 2023 9:39 am [After switching from method 2 (accrual) to method 1 (cash)] There's nothing saying it can't be reversed by switching back to the accrual accounting method (method 2), which one can do without requesting permission. [Right?]
Above, I accidentally stated cash instead of accrual. The question pertains to whether one can go from 1 (default) to 2 to 1 then back to 2.
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April 12, 2023 -- CPI Median Estimates

Post by watchnerd »

[Thread merged into here --admin LadyGeek]

Apparently the median guesstimate from all the big banks is that the April 12, 2023 CPI report will come in at 5.1%:

https://youtu.be/wim7ago4EOA?t=73

If correct, even though that's still above current rates, my guess is that the Fed will pause hikes for a while and take a 'wait and see' attitude until summer CPI comes in.
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Re: April 12, 2023 -- CPI Median Estimates

Post by jebmke »

We should know in three hours. In any case, there isn’t anything I can do about it or in reaction to it so I’m going birding.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
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Re: April 12, 2023 -- CPI Median Estimates

Post by Longdog »

jebmke wrote: Wed Apr 12, 2023 4:32 am We should know in three hours. In any case, there isn’t anything I can do about it or in reaction to it so I’m going birding.
You can tell your birding friends. Or the birds.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by MikeG62 »

CPI-U is out. Came in below expectations (< 5.0% YOY).

Looks like next I Bond rate reset on the variable component will be to ~3.39%.

I plan to sell ours on the 1st day of the 4th month following this adjustment for our I bonds (which will be in Jan of 2024).
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Tom_T »

MikeG62 wrote: Wed Apr 12, 2023 7:38 am CPI-U is out. Came in below expectations (< 5.0% YOY).

Looks like next I Bond rate reset on the variable component will be to ~3.39%.

I plan to sell ours on the 1st day of the 4th month following this adjustment for our I bonds (which will be in Jan of 2024).
Tipswatch calculates it at 3.38%. I'll be selling all my I Bonds on a similar schedule (4th month into the new rate.)
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by MikeG62 »

Tom_T wrote: Wed Apr 12, 2023 7:40 am
MikeG62 wrote: Wed Apr 12, 2023 7:38 am CPI-U is out. Came in below expectations (< 5.0% YOY).

Looks like next I Bond rate reset on the variable component will be to ~3.39%.

I plan to sell ours on the 1st day of the 4th month following this adjustment for our I bonds (which will be in Jan of 2024).
Tipswatch calculates it at 3.38%. I'll be selling all my I Bonds on a similar schedule (4th month into the new rate.)
Ok close enough.
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Re: April 12, 2023 -- CPI Median Estimates

Post by HueyLD »

March 2023 non-seasonably adjusted CPI-U = 301.836

Change from Sep. 2022 to March 2023 = 301.836 - 296.808 = 5.028
5.028/296.808=1.69% or 3.38% annualized.

Thus, the new Ibond variable rate for the next six months will not be so hot!
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by bogledogle87 »

MikeG62 wrote: Wed Apr 12, 2023 7:38 am CPI-U is out. Came in below expectations (< 5.0% YOY).

Looks like next I Bond rate reset on the variable component will be to ~3.39%.

I plan to sell ours on the 1st day of the 4th month following this adjustment for our I bonds (which will be in Jan of 2024).
I was originally thinking the same, but now am considering waiting for more data. This lower rate was heavily affected negatively by the November and December 22 figures. I don't really see monthly CPI figures going negative again for quite a while. By the time you get to January of 2024, it is very possible the next I Bond rate could be already be higher than Fed Funds, especially if something happens causing Fed to cut.

I will be watching the CPI figures over the summer and fall closely along with FFR before selling anything.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by MikeG62 »

bogledogle87 wrote: Wed Apr 12, 2023 7:54 am
MikeG62 wrote: Wed Apr 12, 2023 7:38 am CPI-U is out. Came in below expectations (< 5.0% YOY).

Looks like next I Bond rate reset on the variable component will be to ~3.39%.

I plan to sell ours on the 1st day of the 4th month following this adjustment for our I bonds (which will be in Jan of 2024).
I was originally thinking the same, but now am considering waiting for more data. This lower rate was heavily affected negatively by the November and December 22 figures. I don't really see monthly CPI figures going negative again for quite a while. By the time you get to January of 2024, it is very possible the next I Bond rate could be already be higher than Fed Funds, especially if something happens causing Fed to cut.

I will be watching the CPI figures over the summer and fall closely along with FFR before selling anything.
Yup that is a fair point. I will know the next variable rate come Oct 15th (or thereabouts). That data point will inform the decision. It is my expectation that the variable rate will be even lower for that rate adjustment than the 3.38%.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by barnaby444 »

Tom_T wrote: Wed Apr 12, 2023 7:40 am
MikeG62 wrote: Wed Apr 12, 2023 7:38 am CPI-U is out. Came in below expectations (< 5.0% YOY).

Looks like next I Bond rate reset on the variable component will be to ~3.39%.

I plan to sell ours on the 1st day of the 4th month following this adjustment for our I bonds (which will be in Jan of 2024).
Tipswatch calculates it at 3.38%. I'll be selling all my I Bonds on a similar schedule (4th month into the new rate.)
What is the logic behind the 4th month?
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by bogledogle87 »

MikeG62 wrote: Wed Apr 12, 2023 8:01 am
bogledogle87 wrote: Wed Apr 12, 2023 7:54 am
MikeG62 wrote: Wed Apr 12, 2023 7:38 am CPI-U is out. Came in below expectations (< 5.0% YOY).

Looks like next I Bond rate reset on the variable component will be to ~3.39%.

I plan to sell ours on the 1st day of the 4th month following this adjustment for our I bonds (which will be in Jan of 2024).
I was originally thinking the same, but now am considering waiting for more data. This lower rate was heavily affected negatively by the November and December 22 figures. I don't really see monthly CPI figures going negative again for quite a while. By the time you get to January of 2024, it is very possible the next I Bond rate could be already be higher than Fed Funds, especially if something happens causing Fed to cut.

I will be watching the CPI figures over the summer and fall closely along with FFR before selling anything.
Yup that is a fair point. I will know the next variable rate come Oct 15th (or thereabouts). That data point will inform the decision. It is my expectation that the variable rate will be even lower for that rate adjustment than the 3.38%.
It will be very interesting! I actually expect the October 15th variable rate to be back up in the 4-5% range. I feel like we have gotten all we can out of energy price declines and slowing / deflation of goods. I see services and rents being very sticky and taking over as a driving factor of CPI for quite some time. It's hard to imagine a soft landing back to sub 3% inflation after it seemingly has become entrenched, particularly into services.

With that said, I know absolutely nothing and completely speculating on the future.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Tom_T »

barnaby444 wrote: Wed Apr 12, 2023 8:08 am
Tom_T wrote: Wed Apr 12, 2023 7:40 am
MikeG62 wrote: Wed Apr 12, 2023 7:38 am CPI-U is out. Came in below expectations (< 5.0% YOY).

Looks like next I Bond rate reset on the variable component will be to ~3.39%.

I plan to sell ours on the 1st day of the 4th month following this adjustment for our I bonds (which will be in Jan of 2024).
Tipswatch calculates it at 3.38%. I'll be selling all my I Bonds on a similar schedule (4th month into the new rate.)
What is the logic behind the 4th month?
There is a penalty of the last three months' interest if you sell a bond prior to five years. If I sell at the end of the six month period earning 6.48%, I lose three months at that rate. If I wait until midway into the new six month period at 3.38%, then my penalty is three months at that lower rate.

It's not a huge amount of money. For a $10K bond, the penalty at 3.38% is $84. At 6.48%, it's $162. So, eighty bucks saved by waiting three months.
Last edited by Tom_T on Wed Apr 12, 2023 8:15 am, edited 2 times in total.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by barnaby444 »

Tom_T wrote: Wed Apr 12, 2023 8:10 am
barnaby444 wrote: Wed Apr 12, 2023 8:08 am
Tom_T wrote: Wed Apr 12, 2023 7:40 am
MikeG62 wrote: Wed Apr 12, 2023 7:38 am CPI-U is out. Came in below expectations (< 5.0% YOY).

Looks like next I Bond rate reset on the variable component will be to ~3.39%.

I plan to sell ours on the 1st day of the 4th month following this adjustment for our I bonds (which will be in Jan of 2024).
Tipswatch calculates it at 3.38%. I'll be selling all my I Bonds on a similar schedule (4th month into the new rate.)
What is the logic behind the 4th month?
There is a penalty of the last three months' interest if you sell a bond prior to five years. If I sell at the end of the six month period earning 6.48%, I lose three months at that rate. If I wait until midway into the new six month period at 3.38%, then my penalty is three months at that lower rate.
Makes sense, thanks!
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by MikeG62 »

bogledogle87 wrote: Wed Apr 12, 2023 8:08 am
MikeG62 wrote: Wed Apr 12, 2023 8:01 am
bogledogle87 wrote: Wed Apr 12, 2023 7:54 am
MikeG62 wrote: Wed Apr 12, 2023 7:38 am CPI-U is out. Came in below expectations (< 5.0% YOY).

Looks like next I Bond rate reset on the variable component will be to ~3.39%.

I plan to sell ours on the 1st day of the 4th month following this adjustment for our I bonds (which will be in Jan of 2024).
I was originally thinking the same, but now am considering waiting for more data. This lower rate was heavily affected negatively by the November and December 22 figures. I don't really see monthly CPI figures going negative again for quite a while. By the time you get to January of 2024, it is very possible the next I Bond rate could be already be higher than Fed Funds, especially if something happens causing Fed to cut.

I will be watching the CPI figures over the summer and fall closely along with FFR before selling anything.
Yup that is a fair point. I will know the next variable rate come Oct 15th (or thereabouts). That data point will inform the decision. It is my expectation that the variable rate will be even lower for that rate adjustment than the 3.38%.
It will be very interesting! I actually expect the October 15th variable rate to be back up in the 4-5% range. I feel like we have gotten all we can out of energy price declines and slowing / deflation of goods. I see services and rents being very sticky and taking over as a driving factor of CPI for quite some time. It's hard to imagine a soft landing back to sub 3% inflation after it seemingly has become entrenched, particularly into services.

With that said, I know absolutely nothing and completely speculating on the future.
The shelter component of the CPI-U is lagged. It has been widely reported that actual shelter costs have come down considerably over the last 6-9 months and yet the CPI-U uses lagged data from well before that (by point of fact, the March CPI-U shows shelter up 8.2% YOY!). Once the shelter component of the CPI-U catches up to reality, that will put significant downward pressure on inflation (and I believe its weight on the CPI-U index is around 1/3rd). I could very well be wrong, but I see YOY inflation way below the 5.0% figure just reported come Sept of 2023. If I am right, the variable rate reset for Oct of 2023 should be considerably lower than the 3.38% that is going to go into effect next.
Last edited by MikeG62 on Wed Apr 12, 2023 8:53 am, edited 1 time in total.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Tom_T »

barnaby444 wrote: Wed Apr 12, 2023 8:12 am
Tom_T wrote: Wed Apr 12, 2023 8:10 am
barnaby444 wrote: Wed Apr 12, 2023 8:08 am
Tom_T wrote: Wed Apr 12, 2023 7:40 am
MikeG62 wrote: Wed Apr 12, 2023 7:38 am CPI-U is out. Came in below expectations (< 5.0% YOY).

Looks like next I Bond rate reset on the variable component will be to ~3.39%.

I plan to sell ours on the 1st day of the 4th month following this adjustment for our I bonds (which will be in Jan of 2024).
Tipswatch calculates it at 3.38%. I'll be selling all my I Bonds on a similar schedule (4th month into the new rate.)
What is the logic behind the 4th month?
There is a penalty of the last three months' interest if you sell a bond prior to five years. If I sell at the end of the six month period earning 6.48%, I lose three months at that rate. If I wait until midway into the new six month period at 3.38%, then my penalty is three months at that lower rate.
Makes sense, thanks!
Of course, I'd also have to calculate what else I could do with the money if I sold at the end of the 6.48% period. Assuming a $10,000 bond, three months' penalty for a $10K bond at 6.48% is $162. At 3.38%, it's $84. So, I lower my penalty by $78 if I wait. But, if a money market fund is paying 4.5%, I would earn $112 for three months, which is higher than the $84 I'd save by waiting -- so perhaps I won't wait after all! It all depends on what alternatives I have when the 6.48% period ends.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by LadyGeek »

I merged watchnerd's thread into the ongoing discussion.

(watchnerd's stand-alone thread was originally locked by the moderators. Upon further review, it belongs as part of the I-Bond discussion.)
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by barnaby444 »

Tom_T wrote: Wed Apr 12, 2023 8:19 am
barnaby444 wrote: Wed Apr 12, 2023 8:12 am
Tom_T wrote: Wed Apr 12, 2023 8:10 am
barnaby444 wrote: Wed Apr 12, 2023 8:08 am
Tom_T wrote: Wed Apr 12, 2023 7:40 am

Tipswatch calculates it at 3.38%. I'll be selling all my I Bonds on a similar schedule (4th month into the new rate.)
What is the logic behind the 4th month?
There is a penalty of the last three months' interest if you sell a bond prior to five years. If I sell at the end of the six month period earning 6.48%, I lose three months at that rate. If I wait until midway into the new six month period at 3.38%, then my penalty is three months at that lower rate.
Makes sense, thanks!
Of course, I'd also have to calculate what else I could do with the money if I sold at the end of the 6.48% period. Assuming a $10,000 bond, three months' penalty for a $10K bond at 6.48% is $162. At 3.38%, it's $84. So, I lower my penalty by $78 if I wait. But, if a money market fund is paying 4.5%, I would earn $112 for three months, which is higher than the $84 I'd save by waiting -- so perhaps I won't wait after all! It all depends on what alternatives I have when the 6.48% period ends.
But instead of comparing $78 and $112, shouldn't you compare $162 and $112? By holding the I-bond for 3 more months you effectively earn the lagged interest payment of $162. If you sell you get $112 in a MMF. So waiting is still better, no?
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by JBTX »

bogledogle87 wrote: Wed Apr 12, 2023 8:08 am
MikeG62 wrote: Wed Apr 12, 2023 8:01 am
bogledogle87 wrote: Wed Apr 12, 2023 7:54 am
MikeG62 wrote: Wed Apr 12, 2023 7:38 am CPI-U is out. Came in below expectations (< 5.0% YOY).

Looks like next I Bond rate reset on the variable component will be to ~3.39%.

I plan to sell ours on the 1st day of the 4th month following this adjustment for our I bonds (which will be in Jan of 2024).
I was originally thinking the same, but now am considering waiting for more data. This lower rate was heavily affected negatively by the November and December 22 figures. I don't really see monthly CPI figures going negative again for quite a while. By the time you get to January of 2024, it is very possible the next I Bond rate could be already be higher than Fed Funds, especially if something happens causing Fed to cut.

I will be watching the CPI figures over the summer and fall closely along with FFR before selling anything.
Yup that is a fair point. I will know the next variable rate come Oct 15th (or thereabouts). That data point will inform the decision. It is my expectation that the variable rate will be even lower for that rate adjustment than the 3.38%.
It will be very interesting! I actually expect the October 15th variable rate to be back up in the 4-5% range. I feel like we have gotten all we can out of energy price declines and slowing / deflation of goods. I see services and rents being very sticky and taking over as a driving factor of CPI for quite some time. It's hard to imagine a soft landing back to sub 3% inflation after it seemingly has become entrenched, particularly into services.

With that said, I know absolutely nothing and completely speculating on the future.
The most recent month modest cpi increase is mostly due to shelter, which is lagging in cpi. Real time rents have actually been flat or declining, which would indicate the cpi shelter component eventually should flatten out too.

https://www.cnbc.com/amp/2023/04/12/cpi ... 2023-.html
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Tom_T »

barnaby444 wrote: Wed Apr 12, 2023 8:30 am
Tom_T wrote: Wed Apr 12, 2023 8:19 am
barnaby444 wrote: Wed Apr 12, 2023 8:12 am
Tom_T wrote: Wed Apr 12, 2023 8:10 am
barnaby444 wrote: Wed Apr 12, 2023 8:08 am

What is the logic behind the 4th month?
There is a penalty of the last three months' interest if you sell a bond prior to five years. If I sell at the end of the six month period earning 6.48%, I lose three months at that rate. If I wait until midway into the new six month period at 3.38%, then my penalty is three months at that lower rate.
Makes sense, thanks!
Of course, I'd also have to calculate what else I could do with the money if I sold at the end of the 6.48% period. Assuming a $10,000 bond, three months' penalty for a $10K bond at 6.48% is $162. At 3.38%, it's $84. So, I lower my penalty by $78 if I wait. But, if a money market fund is paying 4.5%, I would earn $112 for three months, which is higher than the $84 I'd save by waiting -- so perhaps I won't wait after all! It all depends on what alternatives I have when the 6.48% period ends.
But instead of comparing $78 and $112, shouldn't you compare $162 and $112? By holding the I-bond for 3 more months you effectively earn the lagged interest payment of $162. If you sell you get $112 in a MMF. So waiting is still better, no?
You know, that sounds right. This is another reason why I want to get rid of my I Bonds -- too much complexity. For 9%, it was worth it. For 3%, not so much.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Johnny Thinwallet »

We bought $40k in I Bonds in late 2021 and early 2022 and they essentially serve as our e-fund. When buying, my initial plan was to hold steady ... not buy any more but also not sell. I'm inclined to hold on to our I Bonds for now as 3.38% might be enough of a return to make holding worthwhile. I was hoping to avoid a 2 percent rate or thereabouts, which we did avoid.

The earliest period I can cash out and still get the full 6.49% rate is 9/1/23. I'll be curious to see what the fixed rate component is. If it's attractive, I may consider selling $20k at the 0 percent fixed rate and re-buying at the higher fixed rate. The downside, of course, is resetting the clock.

All that said, I'm not making any rush decisions now. After all, there will be at least 4 more monthly CPI reports before I'd sell anything anyway in September.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by delrinson »

I was waiting till today to decide on purchases in 2023 or not. If I buy this month, I get a blended rate (including the current fixed rate) of about 5.4% over the course of a year. Not really enough of an incentive. So wife and I will start distributing gifts to each other this year. No motivation to sell any...just not interested in buying when I have the alternative of T bills and MMF.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by billthecat »

delrinson wrote: Wed Apr 12, 2023 9:34 am I was waiting till today to decide on purchases in 2023 or not. If I buy this month, I get a blended rate (including the current fixed rate) of about 5.4% over the course of a year. Not really enough of an incentive. So wife and I will start distributing gifts to each other this year. No motivation to sell any...just not interested in buying when I have the alternative of T bills and MMF.
There are other benefits to consider, like tax-deferral for up to 30 years (unlike MMF or t bills), state tax free (so you must adjust the MMF for state taxes).
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by SafeBonds »

Tipswawtch writes on his article today (4/12):

"The one unknown is: Will the Treasury raise the I Bond’s fixed rate on May 1? It’s definitely possible. I have been speculating that the fixed rate will end up in a range of 0.4% to 0.6% at the reset. No one knows. I will be writing more about this later this week."

What do you guys think? For a long term I Bond holder who wants to maximize the fixed rate, would it be better to buy now or next month? I'm looking forward to Tipwatch's next article.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by chem6022 »

SafeBonds wrote: Wed Apr 12, 2023 9:51 am Tipswawtch writes on his article today (4/12):

"The one unknown is: Will the Treasury raise the I Bond’s fixed rate on May 1? It’s definitely possible. I have been speculating that the fixed rate will end up in a range of 0.4% to 0.6% at the reset. No one knows. I will be writing more about this later this week."

What do you guys think? For a long term I Bond holder who wants to maximize the fixed rate, would it be better to buy now or next month? I'm looking forward to Tipwatch's next article.
I predict the new fixed rate is still trending towards 0.9% to 1.0%. I base that on a formula that seems to work since 2016. It predicts a lag of 5 trading days before the end of the prior 6 months, so I should be able to attempt a prospective prediction the week before the new rate is released on May 1st. Only 8 more trading days of real treasury data to go.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by billthecat »

chem6022 wrote: Wed Apr 12, 2023 10:26 am
SafeBonds wrote: Wed Apr 12, 2023 9:51 am Tipswawtch writes on his article today (4/12):

"The one unknown is: Will the Treasury raise the I Bond’s fixed rate on May 1? It’s definitely possible. I have been speculating that the fixed rate will end up in a range of 0.4% to 0.6% at the reset. No one knows. I will be writing more about this later this week."

What do you guys think? For a long term I Bond holder who wants to maximize the fixed rate, would it be better to buy now or next month? I'm looking forward to Tipwatch's next article.
I predict the new fixed rate is still trending towards 0.9% to 1.0%. I base that on a formula that seems to work since 2016. It predicts a lag of 5 trading days before the end of the prior 6 months, so I should be able to attempt a prospective prediction the week before the new rate is released on May 1st. Only 8 more trading days of real treasury data to go.
What is the formula?
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by anon_investor »

chem6022 wrote: Wed Apr 12, 2023 10:26 am
SafeBonds wrote: Wed Apr 12, 2023 9:51 am Tipswawtch writes on his article today (4/12):

"The one unknown is: Will the Treasury raise the I Bond’s fixed rate on May 1? It’s definitely possible. I have been speculating that the fixed rate will end up in a range of 0.4% to 0.6% at the reset. No one knows. I will be writing more about this later this week."

What do you guys think? For a long term I Bond holder who wants to maximize the fixed rate, would it be better to buy now or next month? I'm looking forward to Tipwatch's next article.
I predict the new fixed rate is still trending towards 0.9% to 1.0%. I base that on a formula that seems to work since 2016. It predicts a lag of 5 trading days before the end of the prior 6 months, so I should be able to attempt a prospective prediction the week before the new rate is released on May 1st. Only 8 more trading days of real treasury data to go.
Interesting, Tipswatch is predicting 0.4%-0.6%. We plan to buy $20k at the end of the month to locking the much higher variable rate for 6 months.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by chem6022 »

billthecat wrote: Wed Apr 12, 2023 10:50 am
chem6022 wrote: Wed Apr 12, 2023 10:26 am
I predict the new fixed rate is still trending towards 0.9% to 1.0%. I base that on a formula that seems to work since 2016. It predicts a lag of 5 trading days before the end of the prior 6 months, so I should be able to attempt a prospective prediction the week before the new rate is released on May 1st. Only 8 more trading days of real treasury data to go.
What is the formula?
In words I talk about the formula in this post. Basically a 126 day average of the 5-year real yield delayed by 5 trading days, then discounted to 65% and rounded to the nearest tenth. Caveats are that there are not enough data points to nail down everything like the 65% ratio exactly. Also like I mention in that linked post, the Treasury can definitely tilt the rates up or down and seems to have done that many times before 2016. The biggest deviation from the data in the past was in 2009 so I can see the worry from tipswatcher with regards to the recent banking issues.

Also it looks like 0.9% would be the predicted fixed rate if the next 8 days are similar to the last few weeks. YMMV.
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