I Bonds Mega Thread (I Bond Heads Rejoice!)

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

Post by AlphaLess »

Mel Lindauer wrote: Mon Jul 11, 2022 12:03 am
AlphaLess wrote: Sun Jul 10, 2022 8:29 pm
Thank you for the very useful post with very useful links!

Related to the article by "The Finance Buff".

In that article, author Harry Sit, suggests that a married couple with sole proprietorship business and trust (each) can buy up to $65K of I-Bonds per year between the two of them.

$10K for A as individual
$10K for B as individual
$10K for A's business
$10K for B's business
$10K for A's trust
$10K for B's trust
$5K from tax refund

Putting aside the last $5K, how reliable is the information about buying additional $40K (between A and B) for their trusts and their sole proprietorships?

TY
A number of forum members have reported success at doing this (and buying even more with multiple trusts).
Thank you for that in formation, Mel.

In researching the approach, I see this from a CNBC article:

https://www.cnbc.com/2022/05/14/how-to- ... -year.html

"That means that even if you’re self-employed and file taxes on an IRS Schedule C as a small business, you can purchase up to $10,000 I bonds annually for that business. This purchasing power also applies to living trusts, through which people can purchase an additional $10,000 in I bonds per year."


Thank you, Mel. Do you know if there are more technical write-ups?

For business, we don't file on Schedule C, but rather, Schedule E (both of us do).
Schedule E says: "For rental real estate, royalties, partnerships, S corps, estates, trusts, etc".

Would you happen to know how is that different?

Separately, there is an additional element that I-bonds have that make them desirable from asset allocation point of view, and that relates to taxes. I-bonds have tax-deferred growth feature.

Typical tax-efficient asset allocation strategy would do the following:

Prefer fixed-income investments (treasuries) into pre-tax accounts (reg IRA or 401K).
Prefer to fill-up ROTH (IRA or 401K) accounts with highest expected return asset (stocks).
Prefer to fill-up after-tax accounts with tax efficient investments (e.g., stocks or munis).

I-Bonds (can be bought with only after tax dollars), when kept to maturity, somewhat act like a pre-tax account, as taxes are deferred to maturity (tax deferred growth). So, I would rather hold I-bonds vs marketable securities for tax reasons.

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

Post by AlphaLess »

As a follow-up post to my previous one, this particular write-up from The Finance Buff describes the process and what to expect in more detail:

https://thefinancebuff.com/buy-i-bonds- ... r-llc.html
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by HueyLD »

AlphaLess asked: “ For business, we don't file on Schedule C, but rather, Schedule E (both of us do).
Schedule E says: "For rental real estate, royalties, partnerships, S corps, estates, trusts, etc".

Would you happen to know how is that different?”

Based on TD’s definition of entity accounts, Schedule E filing does not fit one of the definitions.

“ TreasuryDirect accommodates the following types of entity registrations:

Corporation
Deceased Estate
Limited Liability Company (LLC)
Living Estate (court-appointed legal guardian of the estate of another living person)
Partnership
Professional Limited Liability Company (PLLC)
Sole proprietorship
Trust”

https://www.treasurydirect.gov/indiv/he ... rnmore.htm
anhedonia
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I Bond gifting vs another method

Post by anhedonia »

[Thread merged into here --admin LadyGeek]

I started buying I-Bonds back in 2008 - 2013 and then stopped. Purchased again in 2021 & 2022. I've never paid much attention to the "gifting" provision. Both SO and I have bought $10k each last two years. We're seniors in early 80s

What I did for the first couple years when I first started purchasing, kind of as an estate plan, was to buy bonds in the name and SS number of a good friend, my ex, and two siblings with me as joint owner; my SO did the same for adult child.

The plan was that if we ever needed the money we could cash in the bonds but if not, upon our deaths the bonds would pass to the named co-owners. I have low income and so I've reported accrued interest all these years. My ex doesn't need the money so several years ago we went through the process of removing his name (he needed sig guarantee) from his bond and having it re-issued in my name with a beneficiary. My friend really needed the money so last year I cashed in her bond, gave her the money. My 1099 showed the entire interest received but I was able on Turbo Tax to show the accrued interest and only report 2021 interest as income.

I now know my SO and I could gift bonds to each other and keep them in the gift box (have the 5 year clock start running, get the current high interest) and then deliver them in a year we don't intend to buy I-Bonds-- perhaps 2024/2025--but as we're older I don't like the uncertainty. I've read as much as I can find on this but it's not clear to whom the interest accrues-- the giftee since I would no longer own the bond?

So my SO & I are thinking of using my previous method this year-- he would buy10K for his heir; $ I would buy $20K for mine. Is there any reason not to do this? It really seems easier. (I keep a detailed accounting of yearly interest declared with each bond to be provided to the recipient/heir)

Comments, please.
Statistical
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Re: I Bond gifting vs another method

Post by Statistical »

What I did for the first couple years when I first started purchasing, kind of as an estate plan, was to buy bonds in the name and SS number of a good friend, my ex, and two siblings with me as joint owner; my SO did the same for adult child.
I assume these were paper savings bonds? You could get away with it for that but the rules are different for electronic bonds and outside of tax returns you can't get paper bonds anymore.

You absolutely don't want to do this now for electronic bonds. TD doesn't allowed joint owners for new individually held bonds. They have a primary owner and a secondary owner. If you name someone else as primary owner it is their bond unless they decide otherwise.

Personally I don't see this kind of hacking around with fake primary recipients on the bonds to be "easier" than just you buying multiple frontloaded gift bonds for your SO and your SO buying multiple front loaded gift bonds for you and calling it a day. If you wanted to buy $100k worth of bonds each of you would buy $10k direct and $40k for the other as gifts. $40k total becomes redeemable in a year, $20k more each Jan 1st after that. In five years the full $100k can be redeemed without penalty.

If you do decide to go the gift but undelivered route ensure they have beneficiaries (other than your SO), are listed in your will or other related documents, and that your executor understands their status. Otherwise if you and your SO die they could end up in limbo simply because nobody even knows they exist.
Last edited by Statistical on Tue Jul 12, 2022 3:59 pm, edited 2 times in total.
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Re: I Bond gifting vs another method

Post by evelynmanley »

anhedonia wrote: Tue Jul 12, 2022 1:49 pm I started buying I-Bonds back in 2008 - 2013 and then stopped. Purchased again in 2021 & 2022. I've never paid much attention to the "gifting" provision. Both SO and I have bought $10k each last two years. We're seniors in early 80s

What I did for the first couple years when I first started purchasing, kind of as an estate plan, was to buy bonds in the name and SS number of a good friend, my ex, and two siblings with me as joint owner; my SO did the same for adult child.

The plan was that if we ever needed the money we could cash in the bonds but if not, upon our deaths the bonds would pass to the named co-owners. I have low income and so I've reported accrued interest all these years. My ex doesn't need the money so several years ago we went through the process of removing his name (he needed sig guarantee) from his bond and having it re-issued in my name with a beneficiary. My friend really needed the money so last year I cashed in her bond, gave her the money. My 1099 showed the entire interest received but I was able on Turbo Tax to show the accrued interest and only report 2021 interest as income.

I now know my SO and I could gift bonds to each other and keep them in the gift box (have the 5 year clock start running, get the current high interest) and then deliver them in a year we don't intend to buy I-Bonds-- perhaps 2024/2025--but as we're older I don't like the uncertainty. I've read as much as I can find on this but it's not clear to whom the interest accrues-- the giftee since I would no longer own the bond?

So my SO & I are thinking of using my previous method this year-- he would buy10K for his heir; $ I would buy $20K for mine. Is there any reason not to do this? It really seems easier. (I keep a detailed accounting of yearly interest declared with each bond to be provided to the recipient/heir)

Comments, please.
This might address your questions:

Buy I Bonds as a Gift: What Works and What Doesn’t
December 27, 2021 by Harry Sit

https://thefinancebuff.com/buy-i-bonds-as-gift.html
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by LadyGeek »

I merged anhedonia's thread into the ongoing discussion.

(Thanks to the member who reported the post and provided a link to this thread.)
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anhedonia
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by anhedonia »

Sorry for not posting in the I Bond thread. I've read everything I can on this subject and have never seen the method I described discussed. I've only done this with paper bonds. I just tried to do a registration at TD with someone else as the first named owner and was not allowed.

My question is now moot. We'll have to make a decision about gifting bonds.

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

Post by SuperTrooper87 »

Todays CPI is 9.1% (ouch). Has anyone done the rough math for the projected November rate if this maintains? Also curious if folks think their will be an actual fixed rate this time around?
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by bogledogle87 »

SuperTrooper87 wrote: Wed Jul 13, 2022 7:35 am Todays CPI is 9.1% (ouch). Has anyone done the rough math for the projected November rate if this maintains? Also curious if folks think their will be an actual fixed rate this time around?
Already locked in at over 6% even of the next 3 months are zero. I'll submit another reply below
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by bogledogle87 »

2022-04 ___ 0.56% ___ 8.26%
2022-05 ___ 1.10% ___ 8.58%
2022-06 ___ 1.37% ___ 9.06% ____ Already locked in at 6.13%
2022-07 ___ 0.47% ___ 9.05%
2022-08 ___ 0.47% ___ 9.33% ___ I Bond
2022-09 ___ 0.47% ___ 9.55% ___ 9.05%


With the CPI-U coming in at a surprising 1.37% for June, we already locked in over 6% I Bond rate in October. A modest average of 0.47% per month for the next 3 would push it to 9%. An Average of 0.63% would push it to 10% to set a new record. Could we realistically see 11 or 12% on this cycle?
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by SuperTrooper87 »

bogledogle87 wrote: Wed Jul 13, 2022 8:00 am 2022-04 ___ 0.56% ___ 8.26%
2022-05 ___ 1.10% ___ 8.58%
2022-06 ___ 1.37% ___ 9.06% ____ Already locked in at 6.13%
2022-07 ___ 0.47% ___ 9.05%
2022-08 ___ 0.47% ___ 9.33% ___ I Bond
2022-09 ___ 0.47% ___ 9.55% ___ 9.05%


With the CPI-U coming in at a surprising 1.37% for June, we already locked in over 6% I Bond rate in October. A modest average of 0.47% per month for the next 3 would push it to 9%. An Average of 0.63% would push it to 10% to set a new record. Could we realistically see 11 or 12% on this cycle?
Thank you. This is exactly what I was hoping for. Any thoughts on the fixed rate being above 0 with interest rates increasing?
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by bogledogle87 »

SuperTrooper87 wrote: Wed Jul 13, 2022 8:12 am
bogledogle87 wrote: Wed Jul 13, 2022 8:00 am 2022-04 ___ 0.56% ___ 8.26%
2022-05 ___ 1.10% ___ 8.58%
2022-06 ___ 1.37% ___ 9.06% ____ Already locked in at 6.13%
2022-07 ___ 0.47% ___ 9.05%
2022-08 ___ 0.47% ___ 9.33% ___ I Bond
2022-09 ___ 0.47% ___ 9.55% ___ 9.05%


With the CPI-U coming in at a surprising 1.37% for June, we already locked in over 6% I Bond rate in October. A modest average of 0.47% per month for the next 3 would push it to 9%. An Average of 0.63% would push it to 10% to set a new record. Could we realistically see 11 or 12% on this cycle?
Thank you. This is exactly what I was hoping for. Any thoughts on the fixed rate being above 0 with interest rates increasing?
Unfortunately, there is no formula for the fixed rate. November 2018 fixed rate was 0.5%, so maybe we see something in that range?
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Tdubs »

Well, after this morning's inflation report, maybe my wife and I will gift each other $10k for 2024.
Statistical
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Statistical »

SuperTrooper87 wrote: Wed Jul 13, 2022 8:12 am
bogledogle87 wrote: Wed Jul 13, 2022 8:00 am 2022-04 ___ 0.56% ___ 8.26%
2022-05 ___ 1.10% ___ 8.58%
2022-06 ___ 1.37% ___ 9.06% ____ Already locked in at 6.13%
2022-07 ___ 0.47% ___ 9.05%
2022-08 ___ 0.47% ___ 9.33% ___ I Bond
2022-09 ___ 0.47% ___ 9.55% ___ 9.05%


With the CPI-U coming in at a surprising 1.37% for June, we already locked in over 6% I Bond rate in October. A modest average of 0.47% per month for the next 3 would push it to 9%. An Average of 0.63% would push it to 10% to set a new record. Could we realistically see 11 or 12% on this cycle?
Thank you. This is exactly what I was hoping for. Any thoughts on the fixed rate being above 0 with interest rates increasing?
Fixed rate is based on demand. If Treasury can't meet its ibond inflow goals with 0% it will raise it. If it is ahead of its goals and the rate is non-zero it will lower it.

With inflation become painful and prolonged and the easiest way for most consumer to fight that being ibonds and demand going through roof to the point that TD is buckling under the strain I really doubt they will throw gasoline on that fire and make ibonds an even better deal.

I could be wrong and I really hope so. I would do the "gift trick" to front load a ton of ibonds if they had a non-zero fixed rate.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by PA_Boglehead »

Tdubs wrote: Wed Jul 13, 2022 8:34 am Well, after this morning's inflation report, maybe my wife and I will gift each other $10k for 2024.
Our gift boxes are filled through 2025 as of April. I wonder if we should seriously be considering pre-funding 2026.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by pshonore »

SuperTrooper87 wrote: Wed Jul 13, 2022 8:12 am
bogledogle87 wrote: Wed Jul 13, 2022 8:00 am 2022-04 ___ 0.56% ___ 8.26%
2022-05 ___ 1.10% ___ 8.58%
2022-06 ___ 1.37% ___ 9.06% ____ Already locked in at 6.13%
2022-07 ___ 0.47% ___ 9.05%
2022-08 ___ 0.47% ___ 9.33% ___ I Bond
2022-09 ___ 0.47% ___ 9.55% ___ 9.05%


With the CPI-U coming in at a surprising 1.37% for June, we already locked in over 6% I Bond rate in October. A modest average of 0.47% per month for the next 3 would push it to 9%. An Average of 0.63% would push it to 10% to set a new record. Could we realistically see 11 or 12% on this cycle?
Thank you. This is exactly what I was hoping for. Any thoughts on the fixed rate being above 0 with interest rates increasing?
How have we locked in an October rate? The CPI can go up AND down. I will admit a drop is unlikely but with the significant drop in Energy prices it could happen next month. We won't know for sure until Oct 13.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by 7eight9 »

PA_Boglehead wrote: Wed Jul 13, 2022 8:45 am
Tdubs wrote: Wed Jul 13, 2022 8:34 am Well, after this morning's inflation report, maybe my wife and I will gift each other $10k for 2024.
Our gift boxes are filled through 2025 as of April. I wonder if we should seriously be considering pre-funding 2026.
We prefunded $85K this year and are contemplating going out further. After this morning's CPI print I Bonds sure look like a winning investment for the foreseeable future.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by bogledogle87 »

pshonore wrote: Wed Jul 13, 2022 8:55 am
SuperTrooper87 wrote: Wed Jul 13, 2022 8:12 am
bogledogle87 wrote: Wed Jul 13, 2022 8:00 am 2022-04 ___ 0.56% ___ 8.26%
2022-05 ___ 1.10% ___ 8.58%
2022-06 ___ 1.37% ___ 9.06% ____ Already locked in at 6.13%
2022-07 ___ 0.47% ___ 9.05%
2022-08 ___ 0.47% ___ 9.33% ___ I Bond
2022-09 ___ 0.47% ___ 9.55% ___ 9.05%


With the CPI-U coming in at a surprising 1.37% for June, we already locked in over 6% I Bond rate in October. A modest average of 0.47% per month for the next 3 would push it to 9%. An Average of 0.63% would push it to 10% to set a new record. Could we realistically see 11 or 12% on this cycle?
Thank you. This is exactly what I was hoping for. Any thoughts on the fixed rate being above 0 with interest rates increasing?
How have we locked in an October rate? The CPI can go up AND down. I will admit a drop is unlikely but with the significant drop in Energy prices it could happen next month. We won't know for sure until Oct 13.
Technically, you are correct. But does anyone actually expect a deflationary CPI the next 3 months? Early projections for July are already around 0.40%
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by alluringreality »

bogledogle87 wrote: Wed Jul 13, 2022 8:14 amUnfortunately, there is no formula for the fixed rate. November 2018 fixed rate was 0.5%, so maybe we see something in that range?
The real yield curve was also higher in 2018. I think a slightly positive fixed rate would be reasonable with the current real rates on TIPS, but my apparently optimistic take wouldn't bet on a 0.5% fixed rate to basically match 5 year TIPS.
bogledogle87 wrote: Wed Jul 13, 2022 9:24 am Technically, you are correct. But does anyone actually expect a deflationary CPI the next 3 months? Early projections for July are already around 0.40%
I wouldn't use the word locked, but I think assuming around a zero increase for a floor across the next three months is probably fairly reasonable based on history. I'm willing to agree with the suggestions that rate increases might take a number of months to play out, so I personally don't expect deflation in the next three months. Beyond that point I tend to figure all bets are off, so locking in years of contributions seems a potential overreaction to me. My take is that 0% fixed rate I bonds are nearly as terrible a long-term investment today as they were two years ago, but unless I choose to switch to TIPS, I'll continue buying for practical reasons.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by MichRoots »

Oil is down 11% for the 1st half of July and natural gas probably has a similar type drop. Used cars are down. I think a negative July reading is possible. But I am assuredly letting my ibonds ride past 12 months and intend to add once the calendar hits 2023.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by arsenal_fan »

When's the best time to start redeeming I-Bonds?

I started buying I-Bonds 5 years ago when I was 32 and began investing. Since they are tax-deferred, I assumed I could cash in on them when I'm 62 and retired. I considered them a part of my bonds asset allocation and didn't put much thought into them since they were only 10k per year.

Now, I'm slightly worried that I'll be taxed at a high rate if I'm not retired at 62 :) . Furthermore, now that my expenses have increased recently, I may need to sell either I-Bonds or VTWAX that I hold in Vanguard (taxable). Wondering if it is preferable to sell I-Bonds over VTWAX.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by bogledogle87 »

MichRoots wrote: Wed Jul 13, 2022 10:05 am Oil is down 11% for the 1st half of July and natural gas probably has a similar type drop. Used cars are down. I think a negative July reading is possible. But I am assuredly letting my ibonds ride past 12 months and intend to add once the calendar hits 2023.
The Cleveland Fed puts out live estimates throughout the month. Currently 0.39% estimate for July.
https://www.clevelandfed.org/our-resear ... sting.aspx
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by nps »

Statistical wrote: Wed Jul 13, 2022 8:40 am Fixed rate is based on demand. If Treasury can't meet its ibond inflow goals with 0% it will raise it. If it is ahead of its goals and the rate is non-zero it will lower it.
I have never heard this before. I think the experts on this thread have always referred to the fixed rate determination as "arbitrary." Do you have more information about this demand basis?
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by protagonist »

Mel Lindauer wrote: Sun Jul 03, 2022 3:42 pm

Are you married? If so, your spouse can also buy $10k per year. But you could load up even more by each also purchasing I Bonds for the other in your gift boxes and then gifting them to each other at the rate of $10k per year.
Hi, Mel!
Your post made me curious.
My understanding has been that each spouse is limited to a $10K individual purchase per year (plus an additional $10K each if you both have a trust, plus a potential $5K IRS overpayment reimbursement on taxes).
Are you saying that it is possible to exceed that limit by gifting to each other? And what are the "gift boxes"?

Please explain this.

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

Post by fujiters »

protagonist wrote: Wed Jul 13, 2022 10:49 am
Mel Lindauer wrote: Sun Jul 03, 2022 3:42 pm

Are you married? If so, your spouse can also buy $10k per year. But you could load up even more by each also purchasing I Bonds for the other in your gift boxes and then gifting them to each other at the rate of $10k per year.
Hi, Mel!
Your post made me curious.
My understanding has been that each spouse is limited to a $10K individual purchase per year (plus an additional $10K each if you both have a trust, plus a potential $5K IRS overpayment reimbursement on taxes).
Are you saying that it is possible to exceed that limit by gifting to each other? And what are the "gift boxes"?

Please explain this.

Thanks.
See Harry Sit's article on gifting I bonds: https://thefinancebuff.com/buy-i-bonds-as-gift.html
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Re: What rate if I buy I Bonds now

Post by protagonist »

tibbitts wrote: Wed Jul 06, 2022 9:38 am
FB01 wrote: Wed Jul 06, 2022 9:29 am Hi,

Till October, the rate is 9.62%. If I buy the in July, will I get 9.62 till next 3 months (till October) or next 6 months? And from when I will get the next rate.

Should I wait till October or buy now? Any recommendation would be helpful.
If you're asking that question I'd highly recommend reading more on this site or at TD, because there may be other "features" of the bonds that you're unaware of. While the headline rate is attracting a lot of interest, you don't want to be caught by surprise by any of their unique characteristics.

Availability of funds is more of an issue than interest rates in determining whether to buy now or later. You always get six months of interest at the current rate when you buy an I-bond, then you get whatever rate is in effect when that six months ends.
If you are considering waiting, also consider that if rates are raised, every 0.1% of $10K only amounts to ten bucks per year. The raise would have to be quite substantial to make any significant difference.
Meanwhile, you could be earning 9.62% annualized on your investment.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by user9532 »

nps wrote: Wed Jul 13, 2022 10:47 am
Statistical wrote: Wed Jul 13, 2022 8:40 am Fixed rate is based on demand. If Treasury can't meet its ibond inflow goals with 0% it will raise it. If it is ahead of its goals and the rate is non-zero it will lower it.
I have never heard this before. I think the experts on this thread have always referred to the fixed rate determination as "arbitrary." Do you have more information about this demand basis?
CFR 359 contains the rules/regs for I bond.
§ 359.10 talks about fixed rate, as follows.

"The Secretary, or the Secretary's designee, determines the fixed rate of return. The fixed rate is established for the
life of the bond. The fixed rate will always be greater than or equal to 0.00%.[1] The most recently announced fixed
rate is only for bonds purchased during the six months following the announcement, or for any other period of time
announced by the Secretary".

"[1] However, the fixed rate is not a guaranteed minimum rate. The composite rate is composed of both the
fixed rate and a semiannual inflation rate, which could possibly be less than the fixed rate or negative in
deflationary situations. In all cases, however, the composite rate will always be greater than or equal to
0.00%."
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by jj »

PA_Boglehead wrote: Wed Jul 13, 2022 8:45 am
Tdubs wrote: Wed Jul 13, 2022 8:34 am Well, after this morning's inflation report, maybe my wife and I will gift each other $10k for 2024.
Our gift boxes are filled through 2025 as of April. I wonder if we should seriously be considering pre-funding 2026.
Same
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Weathering »

There was a fake CPI report circulating yesterday. I made a mistake about it. Editing post to correct.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by puravida »

Bought $10K in my Trust name (all assets in Trust to avoid probate) and the site does not allow gifting in that type of account. Anyone else experience this and any remedies? I suppose I could have registered in just my non-trust name.
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I Bonds

Post by Varsh »

[Thread merged into here --admin LadyGeek]

.... I know... I know...another I bond question... don't be aggravated...... I am thinking out till November now and later....what do we think the next rate may be? :) :shock:
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Re: I Bonds

Post by willthrill81 »

There's no way to know what the variable rate will be, but inflation isn't slowing yet, so it will likely still be high, at least similar to what it is currently.
Last edited by willthrill81 on Wed Jul 13, 2022 12:45 pm, edited 1 time in total.
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Re: I Bonds

Post by Statistical »

Since we have three months of the future data so far short of deflation the next rate will be at least 6%. Based on July projections if they hold it will probably be 8%+.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Kevin M »

puravida wrote: Wed Jul 13, 2022 11:55 am Bought $10K in my Trust name (all assets in Trust to avoid probate) and the site does not allow gifting in that type of account. Anyone else experience this and any remedies? I suppose I could have registered in just my non-trust name.
Open an individual account, and then you can do it.
If I make a calculation error, #Cruncher probably will let me know.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Statistical »

puravida wrote: Wed Jul 13, 2022 11:55 am Bought $10K in my Trust name (all assets in Trust to avoid probate) and the site does not allow gifting in that type of account. Anyone else experience this and any remedies? I suppose I could have registered in just my non-trust name.
For TD the gift purchase needs to be made from the giver's account not the giftee.

If you want to buy a $10k bond using your personal limit and gift it TO the trust you need to create a personal TD account and make the gift purchase there. You buying the gift for your trust.

Can trusts even legally issue gifts? That would be the only gift purchase you would make from your trust's account (the trust being the giver and someone else being the giftee).
Last edited by Statistical on Wed Jul 13, 2022 1:30 pm, edited 2 times in total.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by LadyGeek »

I merged Varsh's thread into the ongoing discussion.

(Thanks to the member who reported the post and explained what's wrong.)
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by HueyLD »

Statistical wrote: Wed Jul 13, 2022 1:11 pm
puravida wrote: Wed Jul 13, 2022 11:55 am Bought $10K in my Trust name (all assets in Trust to avoid probate) and the site does not allow gifting in that type of account. Anyone else experience this and any remedies? I suppose I could have registered in just my non-trust name.
For TD the gift purchase needs to be made from the giver's account not the giftee.

If you want to buy a $10k bond using your personal limit and gift it TO the trust you need to create a personal TD account and make the gift purchase there.

Can trusts even legally issues gifts? That would be the only gift purchase you would make from your trust's account (the trust being the giver and someone else being the giftee).
An entity is not permitted to purchase securities as gifts for others or receive gift securities.

https://www.treasurydirect.gov/indiv/he ... rnmore.htm
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by nps »

user9532 wrote: Wed Jul 13, 2022 11:18 am
nps wrote: Wed Jul 13, 2022 10:47 am
Statistical wrote: Wed Jul 13, 2022 8:40 am Fixed rate is based on demand. If Treasury can't meet its ibond inflow goals with 0% it will raise it. If it is ahead of its goals and the rate is non-zero it will lower it.
I have never heard this before. I think the experts on this thread have always referred to the fixed rate determination as "arbitrary." Do you have more information about this demand basis?
CFR 359 contains the rules/regs for I bond.
§ 359.10 talks about fixed rate, as follows.

"The Secretary, or the Secretary's designee, determines the fixed rate of return. The fixed rate is established for the
life of the bond. The fixed rate will always be greater than or equal to 0.00%.[1] The most recently announced fixed
rate is only for bonds purchased during the six months following the announcement, or for any other period of time
announced by the Secretary".

"[1] However, the fixed rate is not a guaranteed minimum rate. The composite rate is composed of both the
fixed rate and a semiannual inflation rate, which could possibly be less than the fixed rate or negative in
deflationary situations. In all cases, however, the composite rate will always be greater than or equal to
0.00%."
Thanks but there's nothing in there that shows a basis for determining what the fixed rate will be. You had stated that it is based on demand, that's what I was interested in learning more about.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Mel Lindauer »

nps wrote: Wed Jul 13, 2022 1:23 pm
user9532 wrote: Wed Jul 13, 2022 11:18 am
nps wrote: Wed Jul 13, 2022 10:47 am
Statistical wrote: Wed Jul 13, 2022 8:40 am Fixed rate is based on demand. If Treasury can't meet its ibond inflow goals with 0% it will raise it. If it is ahead of its goals and the rate is non-zero it will lower it.
I have never heard this before. I think the experts on this thread have always referred to the fixed rate determination as "arbitrary." Do you have more information about this demand basis?
CFR 359 contains the rules/regs for I bond.
§ 359.10 talks about fixed rate, as follows.

"The Secretary, or the Secretary's designee, determines the fixed rate of return. The fixed rate is established for the
life of the bond. The fixed rate will always be greater than or equal to 0.00%.[1] The most recently announced fixed
rate is only for bonds purchased during the six months following the announcement, or for any other period of time
announced by the Secretary".

"[1] However, the fixed rate is not a guaranteed minimum rate. The composite rate is composed of both the
fixed rate and a semiannual inflation rate, which could possibly be less than the fixed rate or negative in
deflationary situations. In all cases, however, the composite rate will always be greater than or equal to
0.00%."
Thanks but there's nothing in there that shows a basis for determining what the fixed rate will be. You had stated that it is based on demand, that's what I was interested in learning more about.
Demand for the current extremely high composite rate (even with the fixed 0% rate) is through the roof, so there's absolutely no reason for Treasury to have to raise the fixed rate when they're already overwhelmed by the existing demand.
Best Regards - Mel | | Semper Fi
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by calwatch »

On the other hand, TIPS rates are above 0%. Rather than pre-buying I Bonds for 2024 and beyond I am considering buying TIPS instead. For 2023, I have until October to get the current 9+% rate and whatever is in place for November 2022-April 2023.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Statistical »

calwatch wrote: Wed Jul 13, 2022 1:50 pm On the other hand, TIPS rates are above 0%. Rather than pre-buying I Bonds for 2024 and beyond I am considering buying TIPS instead. For 2023, I have until October to get the current 9+% rate and whatever is in place for November 2022-April 2023.
Depends on your time horizon. If it is 5+ years then TIPS are an attractive choice. Even if the treasury did raise the ibond fixed rate (unlikely IMHO) it would be because everything else is even more expensive for the treasury in other words the 5 year TIPS would be yielding an even higher coupon.

If you need the funds in 1 to 4 years it is really hard to beat the very cheap EWP of 3 months interest on an ibond.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by calwatch »

Statistical wrote: Wed Jul 13, 2022 1:54 pm
calwatch wrote: Wed Jul 13, 2022 1:50 pm On the other hand, TIPS rates are above 0%. Rather than pre-buying I Bonds for 2024 and beyond I am considering buying TIPS instead. For 2023, I have until October to get the current 9+% rate and whatever is in place for November 2022-April 2023.
Depends on your time horizon. If it is 5+ years then TIPS are an attractive choice. Even if the treasury did raise the ibond fixed rate (unlikely IMHO) it would simply because everything else is even more expensive for the treasury in other words the 5 year TIPS is yielding an even higher coupon.

If you need the funds in 1 to 4 years it is really hard to beat the very cheap EWP of 3 months interest.
I'm more thinking about the risk of lock-in for 2024 and beyond. Sure, when I have six figures in I Bonds $10,000 a year in the out years isn't that significant, but there are complications should the relative who is gifting me the out years dies or is incapacitated. If you buy an I Bond as a gift for delivery for 2024, you can't get the money out at all until that year begins, based on existing Treasury regulations.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Kevin M »

Statistical wrote: Wed Jul 13, 2022 1:54 pm
calwatch wrote: Wed Jul 13, 2022 1:50 pm On the other hand, TIPS rates are above 0%. Rather than pre-buying I Bonds for 2024 and beyond I am considering buying TIPS instead. For 2023, I have until October to get the current 9+% rate and whatever is in place for November 2022-April 2023.
Depends on your time horizon. If it is 5+ years then TIPS are an attractive choice. Even if the treasury did raise the ibond fixed rate (unlikely IMHO) it would be because everything else is even more expensive for the treasury in other words the 5 year TIPS would be yielding an even higher coupon.

If you need the funds in 1 to 4 years it is really hard to beat the very cheap EWP of 3 months interest on an ibond.
Actually, the ask yield for the 1/15/2024 (1.5 years) is +0.08% now at Fidelity, so yields are positive at 1.5 year maturity and beyond.

I consider TIPS attractive even at negative yields once I bonds are maxed out. I have bought maturities as short as six months recently. We already bought $70K in I bonds in 2022. I am not interested in going beyond 2023 for gifts, since there may be more attractive options in 2023.

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

Post by nps »

Mel Lindauer wrote: Wed Jul 13, 2022 1:40 pm
nps wrote: Wed Jul 13, 2022 1:23 pm
user9532 wrote: Wed Jul 13, 2022 11:18 am
nps wrote: Wed Jul 13, 2022 10:47 am
Statistical wrote: Wed Jul 13, 2022 8:40 am Fixed rate is based on demand. If Treasury can't meet its ibond inflow goals with 0% it will raise it. If it is ahead of its goals and the rate is non-zero it will lower it.
I have never heard this before. I think the experts on this thread have always referred to the fixed rate determination as "arbitrary." Do you have more information about this demand basis?
CFR 359 contains the rules/regs for I bond.
§ 359.10 talks about fixed rate, as follows.

"The Secretary, or the Secretary's designee, determines the fixed rate of return. The fixed rate is established for the
life of the bond. The fixed rate will always be greater than or equal to 0.00%.[1] The most recently announced fixed
rate is only for bonds purchased during the six months following the announcement, or for any other period of time
announced by the Secretary".

"[1] However, the fixed rate is not a guaranteed minimum rate. The composite rate is composed of both the
fixed rate and a semiannual inflation rate, which could possibly be less than the fixed rate or negative in
deflationary situations. In all cases, however, the composite rate will always be greater than or equal to
0.00%."
Thanks but there's nothing in there that shows a basis for determining what the fixed rate will be. You had stated that it is based on demand, that's what I was interested in learning more about.
Demand for the current extremely high composite rate (even with the fixed 0% rate) is through the roof, so there's absolutely no reason for Treasury to have to raise the fixed rate when they're already overwhelmed by the existing demand.
So fixed rate is based on demand? That was the question.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Richard1580 »

nps wrote: Wed Jul 13, 2022 5:39 pm
Mel Lindauer wrote: Wed Jul 13, 2022 1:40 pm
user9532 wrote: Wed Jul 13, 2022 11:18 am "The Secretary, or the Secretary's designee, determines the fixed rate of return.
Demand for the current extremely high composite rate (even with the fixed 0% rate) is through the roof, so there's absolutely no reason for Treasury to have to raise the fixed rate when they're already overwhelmed by the existing demand.
So fixed rate is based on demand? That was the question.
And the answer seems to be that the rate is at the discretion of the Treasury. Given the nature of supply and demand, why would they raise the fixed rate?
"The quest is the quest."
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by willthrill81 »

Richard1580 wrote: Wed Jul 13, 2022 6:00 pm
nps wrote: Wed Jul 13, 2022 5:39 pm
Mel Lindauer wrote: Wed Jul 13, 2022 1:40 pm
user9532 wrote: Wed Jul 13, 2022 11:18 am "The Secretary, or the Secretary's designee, determines the fixed rate of return.
Demand for the current extremely high composite rate (even with the fixed 0% rate) is through the roof, so there's absolutely no reason for Treasury to have to raise the fixed rate when they're already overwhelmed by the existing demand.
So fixed rate is based on demand? That was the question.
And the answer seems to be that the rate is at the discretion of the Treasury. Given the nature of supply and demand, why would they raise the fixed rate?
There's close to a zero likelihood of the Treasury raising the fixed rate anytime soon.
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by AlphaLess »

HueyLD wrote: Tue Jul 12, 2022 7:58 am AlphaLess asked: “ For business, we don't file on Schedule C, but rather, Schedule E (both of us do).
Schedule E says: "For rental real estate, royalties, partnerships, S corps, estates, trusts, etc".

Would you happen to know how is that different?”

Based on TD’s definition of entity accounts, Schedule E filing does not fit one of the definitions.

“ TreasuryDirect accommodates the following types of entity registrations:

Corporation
Deceased Estate
Limited Liability Company (LLC)
Living Estate (court-appointed legal guardian of the estate of another living person)
Partnership
Professional Limited Liability Company (PLLC)
Sole proprietorship
Trust”

https://www.treasurydirect.gov/indiv/he ... rnmore.htm
Great response, thank you!
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by Mel Lindauer »

nps wrote: Wed Jul 13, 2022 5:39 pm
Mel Lindauer wrote: Wed Jul 13, 2022 1:40 pm
nps wrote: Wed Jul 13, 2022 1:23 pm
user9532 wrote: Wed Jul 13, 2022 11:18 am
nps wrote: Wed Jul 13, 2022 10:47 am

I have never heard this before. I think the experts on this thread have always referred to the fixed rate determination as "arbitrary." Do you have more information about this demand basis?
CFR 359 contains the rules/regs for I bond.
§ 359.10 talks about fixed rate, as follows.

"The Secretary, or the Secretary's designee, determines the fixed rate of return. The fixed rate is established for the
life of the bond. The fixed rate will always be greater than or equal to 0.00%.[1] The most recently announced fixed
rate is only for bonds purchased during the six months following the announcement, or for any other period of time
announced by the Secretary".

"[1] However, the fixed rate is not a guaranteed minimum rate. The composite rate is composed of both the
fixed rate and a semiannual inflation rate, which could possibly be less than the fixed rate or negative in
deflationary situations. In all cases, however, the composite rate will always be greater than or equal to
0.00%."
Thanks but there's nothing in there that shows a basis for determining what the fixed rate will be. You had stated that it is based on demand, that's what I was interested in learning more about.
Demand for the current extremely high composite rate (even with the fixed 0% rate) is through the roof, so there's absolutely no reason for Treasury to have to raise the fixed rate when they're already overwhelmed by the existing demand.
So fixed rate is based on demand? That was the question.
Years ago, when they raised the rate unexpectedly, they told me that the reason they did so was because they wanted to increase ownership of (at that time) the newer I Bonds. As you saw above in the Regs, there could be any number of reasons for doing what they do, and they don't have to explain their actions. There was speculation that a pattern seemed to be developing that the fixed rate was based on a lower percentage of the TIPS real rate, but again, that was pure speculation, based on what some observed as a bit of a pattern.

Regardless of what they used in the past, when they're overwhelmed with a 0% fixed rate because of the high inflation component of the composite rate, why do you think they would raise the rate? I sure can't think of any.
Best Regards - Mel | | Semper Fi
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Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Post by AlphaLess »

Richard1580 wrote: Wed Jul 13, 2022 6:00 pm
nps wrote: Wed Jul 13, 2022 5:39 pm
Mel Lindauer wrote: Wed Jul 13, 2022 1:40 pm
user9532 wrote: Wed Jul 13, 2022 11:18 am "The Secretary, or the Secretary's designee, determines the fixed rate of return.
Demand for the current extremely high composite rate (even with the fixed 0% rate) is through the roof, so there's absolutely no reason for Treasury to have to raise the fixed rate when they're already overwhelmed by the existing demand.
So fixed rate is based on demand? That was the question.
And the answer seems to be that the rate is at the discretion of the Treasury. Given the nature of supply and demand, why would they raise the fixed rate?
These comments makes sense.

May I also suggest to look at the "US Treasury Real Yield Curve"

https://home.treasury.gov/resource-cent ... nth=202207

____Date___ 5YR 7YR 10YR 20YR 30YR
01/03/2022 -1.58 -1.25 -0.97 -0.55 -0.36
--
07/01/2022 0.28 0.42 0.54 0.76 0.88
07/05/2022 0.31 0.41 0.52 0.72 0.84
07/06/2022 0.48 0.56 0.64 0.82 0.94
07/07/2022 0.52 0.60 0.68 0.87 0.98
07/08/2022 0.51 0.62 0.72 0.91 1.02
07/11/2022 0.49 0.58 0.67 0.87 0.99
07/12/2022 0.51 0.57 0.64 0.83 0.94
07/13/2022 0.51 0.55 0.60 0.77 0.88

Since I-Bonds can essentially be redeemed at any time (more or less, sans the 1-year lockup, and the sub 5-year 3mo penalty) for current value (purchase price plus compounded interest), I-Bond is akin to a short-term bond which perpetually gets re-issued every 6 months.

For treasury to set a non-zero fixed rate, they would have to be confident that the expected interest rate for short-end of the Real Yield Curve for the NEXT 30 years is going to be some positive number.

However, we are in historically low interest rate environment, and the current 5-Year Real Yield is at mere 0.5%.

So, there is no financial justification to pay a higher fixed rate, at least now.

If the 5Yr nominal goes to 1%, or 1.25%, and stays there for a while, then maybe, they will consider setting a non-zero fixed rate.
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