I-bonds

[BuffaloKyle]

46 minutes ago, GlenDale said:

Thanks. So the. 9.6% is not a constant for the life of the holding (6 month changes not withstanding)?

No, it changes every six months.

[GlenDale]

4 hours ago, BuffaloKyle said:

No, it changes every six months.

Given, the variable changes but how does one determine the fixed rate?

[Jim_n_NYC]

6 hours ago, GlenDale said:

Given, the variable changes but how does one determine the fixed rate?

The fixed rate is what it is when you buy the bond until you sell it.  Right now it's 1.3%, so for any bonds bought between now and end of April '24 that's what it will be and will remain 1.3% on those bonds until they are sold.

[BuffaloKyle]

16 hours ago, GlenDale said:

Given, the variable changes but how does one determine the fixed rate?

They don't have the formula for the fixed rate determination posted but it's something to do with inflation and interest rates long term. So now that this has been going on for awhile, inflation & high interest rates, that's why the fixed rate is going up now as well.

[GlenDale]

8 minutes ago, BuffaloKyle said:

They don't have the formula for the fixed rate determination posted but it's something to do with inflation and interest rates long term. So now that this has been going on for awhile, inflation & high interest rates, that's why the fixed rate is going up now as well.

Definitely difficult to keep straight but from a simple practical stand, if the best I’ll earn on these two bonds are less than 4% it was a bad investment choice considering the current state of CD rates.

Today I opened a 25k cd at Forbright yielding 5.75% 

[handiacefailure]

Suze Ormans podcast on Weds was pretty interesting.

 

I already bought one for my individual account in Early January and held off for my trust account.   If I do buy one for that accoutn I'm going to sell one that has the zero percent fixed rate at the beggining of next month and buy the new one the end of the month.

 

Can't remember if it was addressed in this thread or not she metnioned is you earn interest for the whole month regardless of when you buy it and you lose out on the interest for the entire month you sell it in, so buy towards the end of the month and sell on the 2nd.

Reason I am debating on buying one is she mentioned the fixed rate.   I always thought you were guaranteed the fixed arte the life of the bond, and found out it isn't the case if there's deflation.  

Thinking of just taking the three month interest hit and buying another 28 day Tbill with it and continue to reinvest that.   I live in a state with a high state tax rate so treasuries are nice being exempt from state tax

[BuffaloKyle]

Just a reminder as @handiacefailure said above if you're buying an ibond next month wait until closer to the end of the month since you'll still earn interest for the whole month.

[BuffaloKyle]

Anyone find a prediction for what next month's I bond rate will be? I bought my 10k limit in January so I hope the fixed rate doesn't go way up. 😅

[Kevin Slater]

16 hours ago, BuffaloKyle said:

Anyone find a prediction for what next month's I bond rate will be? I bought my 10k limit in January so I hope the fixed rate doesn't go way up. 😅

... cuz if I can't have it, I don't want anyone else to get it?   

Kevin Slater

[BuffaloKyle]

32 minutes ago, Kevin Slater said:

... cuz if I can't have it, I don't want anyone else to get it?   

Kevin Slater

Yup! 😇

[Beancounter]

The link below provides an analysis of what the projected I-bond rate will be, both the fixed and variable rates.  It’s a fairly long video (22-23 minutes) but it explains how the rate projections are arrived at.  
 

For those not wanting to watch the entire video this video projects the fixed rate to be 1.2% and the variable rate to be between 1.98% and 2.8% (I think).  I’d have to rewatch the video to see what the upper-end variable rate would be.   
 

Prosperity to all.  

 

https://youtu.be/g1mVtOxYEHE?si=YU2ZvUViH9EN_UJ2

Edited April 10, 2024 by Beancounter

[Beancounter]

Looks like the new I-bond rate is 4.30% 

https://www.cnet.com/personal-finance/investing/i-bonds-rate-cools-down-while-long-term-value-increases/

[BuffaloKyle]

2 hours ago, Beancounter said:

Looks like the new I-bond rate is 4.30% 

https://www.cnet.com/personal-finance/investing/i-bonds-rate-cools-down-while-long-term-value-increases/

That's an old article from May 2023. This article came out today predicting a rate of 4.25% (2.95% inflation & 1.30% fixed)

https://www.msn.com/en-us/money/markets/treasury-may-set-new-i-bonds-rate-at-around-4-3/ar-BB1loJWC

 

[Kevin Slater]

Fiscal Service Announces New Savings Bonds Rates, Series I to Earn 4.30%, Series EE to Earn 2.50% — TreasuryDirect

WWW.TREASURYDIRECT.GOV

 

 

The new rate will be 4.3% (down from 5.27%), with a .9% fixed rate (down from 1.3).

Kevin Slater

 

[+ augustus]

The new rate for the next 6 months is 4.28%.

 

Treasury Department announces new Series I bond rate of 4.28% for the next six months

WWW.CNBC.COM

---

The U.S. Department of the Treasury announced the new rate for Series I bonds through October 2024.

 

[Kevin Slater]

On 4/19/2024 at 5:38 AM, Kevin Slater said:

Fiscal Service Announces New Savings Bonds Rates, Series I to Earn 4.30%, Series EE to Earn 2.50% — TreasuryDirect

WWW.TREASURYDIRECT.GOV

 

 

The new rate will be 4.3% (down from 5.27%), with a .9% fixed rate (down from 1.3).

Kevin Slater

 

 

1 hour ago, augustus said:

The new rate for the next 6 months is 4.28%.

 

Treasury Department announces new Series I bond rate of 4.28% for the next six months

WWW.CNBC.COM

---

The U.S. Department of the Treasury announced the new rate for Series I bonds through October 2024.

 

I'm an idiot.  I posted the 2023 article and rate.  Thanks for the correction.

Kevin Slater

[BuffaloKyle]

7 hours ago, Kevin Slater said:

I'm an idiot.  I posted the 2023 article and rate.  Thanks for the correction.

Kevin Slater

I can't believe I didn't catch that when you posted it! 😅

Kind of funny though it's the same exact overall rate just a different fixed rate.

[+ augustus]

9 hours ago, Kevin Slater said:

I posted the 2023 article and rate.  Thanks for the correction.

You are welcome.  You know, a fixed rate of 1.3% plus the inflation rate is not bad.  If you hold the bonds for the full 30 years (and still alive) you get about 40% real return.  It is very important to take inflation into account these days with the National Debt so high, worse than in 1945 to pay for war spending.  Are you aware that the war bonds issued during the war years had a 10-year maturity and paid 2.5%, with no CPI adjustment?  But the CPI soared 30% from 1946-1948 as the government printed money to pay its enormous debts, resulting in serious losses for the savers.  

[handiacefailure]

Suze Ormans podcast yesterday was good.   I'm thinking of selling my ibonds and investing in 30 year bonds since they announced the fed rate cut or buying some 30 year bonds and putting some back in the stock market.   

[+ FrankR]

41 minutes ago, handiacefailure said:

Suze Ormans podcast yesterday was good.   I'm thinking of selling my ibonds and investing in 30 year bonds since they announced the fed rate cut or buying some 30 year bonds and putting some back in the stock market.   

I loved her show on CNBC, but I am not fond of the podcast format. I’m keeping my powder dry and avoiding the stock market - it is running too hot when considering economic metrics. I am giving TIPS a fresh look too. 

[BuffaloKyle]

3 hours ago, handiacefailure said:

I'm thinking of selling my ibonds   

If you have one with the fixed 1.30% rate that has been offered recently I would strongly advise you to hold onto it. When inflation eventually gets hot again it will pay very handsomely. The one I bought in the summer of 2022 when it was over 9 percent I'll sell eventually as it had a 0% fixed rate. I might wait though for the 5 year mark to not lose any interest.

Edited August 27, 2024 by BuffaloKyle

[Jim_n_NYC]

12 hours ago, BuffaloKyle said:

If you have one with the fixed 1.30% rate that has been offered recently I would strongly advise you to hold onto it. When inflation eventually gets hot again it will pay very handsomely. The one I bought in the summer of 2022 when it was over 9 percent I'll sell eventually as it had a 0% fixed rate. I might wait though for the 5 year mark to not lose any interest.

Why wait? The current split between t-bills and the non fixed rate I-bonds is almost double, which means the interest you get in the 3 months after you sell will more than make up for the 3 months interest you waiting to save...in 3 years.

[BuffaloKyle]

10 hours ago, Jim_n_NYC said:

Why wait? The current split between t-bills and the non fixed rate I-bonds is almost double, which means the interest you get in the 3 months after you sell will more than make up for the 3 months interest you waiting to save...in 3 years.

Well I definitely don't want to sell it this year as I don't want the interest to go onto my 2024 tax year. I've made a ton of interest from the high rate on my savings account. That will be coming down so I would wanna wait until January at the earliest to sell it.

[handiacefailure]

On 8/26/2024 at 8:41 PM, BuffaloKyle said:

If you have one with the fixed 1.30% rate that has been offered recently I would strongly advise you to hold onto it. When inflation eventually gets hot again it will pay very handsomely. The one I bought in the summer of 2022 when it was over 9 percent I'll sell eventually as it had a 0% fixed rate. I might wait though for the 5 year mark to not lose any interest.

I bought 2-$10K ones in 2021 that have a zero percent fixed rate that I definitely want to get rid of.    they were a great investment at the time but now there are stocks out there with a lot better return.   Nice thing though about the Ibonds is that I live in a state with a high income tax, so there's no state income tax on them.   

 

[BuffaloKyle]

I just noticed today when I was on the treasury direct site that this was the final year you could use $5,000 of your tax refund to get a paper i bond. That option will no longer be available now.

Buying savings bonds — TreasuryDirect

TREASURYDIRECT.GOV

Starting January 1, 2025, you will no longer be able to buy paper Series I savings bonds with your tax refund.

Why can’t I use my tax refund to buy paper series I bonds anymore?

This option was costly and not frequently used. The mailing of physical savings bonds was also subject to fraud, theft, loss, and delays. Buying savings bonds online is simple, safe, and affordable.