I-bonds

[+ Lucky]

I joined the I club!

[BeamerBikes]

14 hours ago, BuffaloKyle said:

 

Just got my 10k worth today! And yes it says issued May 1, 2022. Does the current value update monthly or every six months then @Kevin Slater?

Updates monthly. You may need to click through for detail.  I will see the face value on Series EE and I, then click through to see actual value.  This is true even for new ones bought this year. 

[handiacefailure]

13 hours ago, Kevin Slater said:

I think it may take a year to see the value update for the first time (because it's not able to be sold in that period), then you see it update monthly.  But that's just a guess as I'm new to buying via TresuryDirect as well.

Kevin Slater

Not sure how often it updates.   I bought one late last year and one in early January for my individual name and both are showing a value of more than the $10K but I can't find out how to get a transaction history of when the interest posted and amounts.

I found out a few weeks ago my trust can also buy $10K a year and bought $10k in a different account in my trust name a few weeks ago and it's showing the value at only $10K.

[BuffaloKyle]

9 hours ago, handiacefailure said:

I found out a few weeks ago my trust can also buy $10K a year and bought $10k in a different account in my trust name a few weeks ago and it's showing the value at only $10K.

You can also have someone else buy 10k and put you down as a second owner. I'll just wait to see what the rate is next year if I want to buy another 10k. That way my first 10k would be available as well to withdraw if there was a huge emergency. 

[Beancounter]

On 5/9/2022 at 11:10 PM, handiacefailure said:

Not sure how often it updates.   I bought one late last year and one in early January for my individual name and both are showing a value of more than the $10K but I can't find out how to get a transaction history of when the interest posted and amounts.

I found out a few weeks ago my trust can also buy $10K a year and bought $10k in a different account in my trust name a few weeks ago and it's showing the value at only $10K.

https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm

This link may provide the answer to your questions.

 

[BeamerBikes]

On 5/9/2022 at 11:08 PM, BeamerBikes said:

Updates monthly. You may need to click through for detail.  I will see the face value on Series EE and I, then click through to see actual value.  This is true even for new ones bought this year. 

Correction, updates quarterly.  

Linked accounts only show face value unless you click into the linked accounts, then click into the detail.  

[handiacefailure]

Suze Orman did another podcast yesterday on Ibonds.

One thing I found out is if you want to change linked bank accounts you have to go to a branch of the bank and get a medallion stamp.   Not sure how that will work out with people who have internet based banks 

[SFGateboy]

Just bought in as well--I have to express my thanks to this forum for introducing me to the idea in the first place. I had to really do my research to make sure this was legit since the website looks straight out of 2001!!

[BuffaloKyle]

51 minutes ago, SFGateboy said:

Just bought in as well--I have to express my thanks to this forum for introducing me to the idea in the first place. I had to really do my research to make sure this was legit since the website looks straight out of 2001!!

I know I felt like I was back in high school surfing the web. The government is painfully slow to update sites. I remember the NY unemployment website disaster once the pandemic hit. The site crashed from all the sudden traffic and a pop up message told people the site was best viewed using internet explorer or netscape browsers. They never had gotten money approved to update it. 

[BeamerBikes]

15 hours ago, SFGateboy said:

Just bought in as well--I have to express my thanks to this forum for introducing me to the idea in the first place. I had to really do my research to make sure this was legit since the website looks straight out of 2001!!

Bright side, their security operation is tight.  One Time Passwords, virtual keyboards to prevent key loggers, and personalized image verification.  

All good stuff.  Maybe not as slick as some banks fraud detection, but I'll take prevention anyday. 

[+ Lucky]

I-bonds are written up and recommended in today's Wall Street Journal. There is a paywall, so here are some hints:

To be sure, no investment is perfect for everyone. But series I bonds have so many attractive features that they represent an “absolutely superb” investment opportunity, says Burton Malkiel, author of the investment classic “A Random Walk Down Wall Street.”

If I buy these Series I savings bonds, what’s the minimum amount of time I have to hold them?

 

At least one year. If you can’t afford to lock up any money for at least that long, these bonds aren’t for you. But if you can, keep in mind that they can continue to earn interest for 30 years, or until you decide to cash them in, whichever comes first. If you redeem them before five years, you lose interest for the previous three months. “For example, if you cash an I bond after 18 months, you get the first 15 months of interest,” the Treasury website says.

If I buy now, am I guaranteed to get that 9.62% rate for as long as I hold the bonds?

No. That 9.62% rate is only the initial annualized rate on new I bonds sold from May through October of this year. That rate “is applied to the 6 months after the purchase is made,” the Treasury site says. “For example, if you buy an I bond on July 1, 2022, the 9.62% would be applied through January 1, 2023. Interest is compounded semiannually.”

The Treasury resets the rate every six months based on a formula tied to inflation. Since nobody knows precisely what will happen on the inflation front, we don’t know today what the new initial rate will be starting in November.

“Rate updates affect both new and previously issued bonds,” a Treasury spokesman says. “The composite interest rate that applies to a Series I savings bond is updated every six months from when the bond is issued until the bond matures.” For more details on how the bonds earn interest, see the Treasury’s site.

Are there limits on how much of these bonds I am allowed to buy each year?

Yes. The annual limit is $10,000 per person, according to the Treasury. You can buy the bonds in electronic form from Treasurydirect.gov, and you can also buy up to an additional $5,000 a year in paper I bonds by using your federal income-tax refund. Also, many investors buy Series I bonds not only for themselves but also as gifts for relatives, friends and others.

https://www.wsj.com/articles/series-i-savings-bonds-what-you-should-know-11652834560?mod=hp_trending_now_article_pos4

[BuffaloKyle]

20 minutes ago, Lucky said:

If I buy now, am I guaranteed to get that 9.62% rate for as long as I hold the bonds?

No. That 9.62% rate is only the initial annualized rate on new I bonds sold from May through October of this year. That rate “is applied to the 6 months after the purchase is made,” the Treasury site says. “For example, if you buy an I bond on July 1, 2022, the 9.62% would be applied through January 1, 2023. Interest is compounded semiannually.”

That seems weird. So if someone bought one in September they would get the 9.62% for six months then even if it went way down with the new calculation in October? So I guess you guys have plenty of time to jump on the i train this summer. 

[Kevin Slater]

3 hours ago, BuffaloKyle said:

That seems weird. So if someone bought one in September they would get the 9.62% for six months then even if it went way down with the new calculation in October? So I guess you guys have plenty of time to jump on the i train this summer. 

That's why a lot of us were gaming our 2022 purchase-- buy before the new May rate or not?  I split mine 50/50.

Kevin Slater

[Frequentflier]

This article points out that businesses (LLCs, etc.) can also buy I bonds.  A way to invest beyond the $10,000 (or $15,000) annual limit for individuals.  Unless I'm missing something (which is possible) that seems legitimate.

https://thefinancebuff.com/buy-i-bonds-business-sole-proprietor-llc.html

Another one:

"You may also buy more I bonds through businesses, trusts or estates. For example, a married couple with separate businesses may each purchase $10,000 per company, plus $10,000 each as individuals, totaling $40,000."

https://www.cnbc.com/2022/05/02/i-bonds-to-deliver-a-record-9point62percent-interest-for-the-next-six-months.html

Edited May 29, 2022 by Frequentflier

[handiacefailure]

On 5/29/2022 at 4:18 PM, Frequentflier said:

This article points out that businesses (LLCs, etc.) can also buy I bonds.  A way to invest beyond the $10,000 (or $15,000) annual limit for individuals.  Unless I'm missing something (which is possible) that seems legitimate.

https://thefinancebuff.com/buy-i-bonds-business-sole-proprietor-llc.html

Another one:

"You may also buy more I bonds through businesses, trusts or estates. For example, a married couple with separate businesses may each purchase $10,000 per company, plus $10,000 each as individuals, totaling $40,000."

https://www.cnbc.com/2022/05/02/i-bonds-to-deliver-a-record-9point62percent-interest-for-the-next-six-months.html

And if the couple each has their own trust that is another $20K a year.

I bought a $10K individual and $10K in my trust this year and wish I would have known about this loophole last year.   I knew a trust could buy $10K but I thought the trust had to have it's own Tax ID and I found out a couple months ago this isn't the case

[BuffaloKyle]

Apparently in early May the treasury site crashed from everyone trying to buy I Bonds. I didn't have or notice any trouble. 

https://journalnow.com/michelle-singletary-inflation-linked-u-s-bonds-crashed-the-treasurydirect-website/article_b80f68ea-dbd9-11ec-855b-478f9190ec26.html

She also says some people reported getting locked out of accounts or never getting the bonds either at all. And that the site needs a major updating which needs to include a better way to update your bank information.

Edited June 6, 2022 by BuffaloKyle

[Kevin Slater]

The $5k bond I bought in February is now showing as worth $5030, so apparently it updates after the first four months, then monthly, I'd assume.

Kevin Slater

[BuffaloKyle]

9 minutes ago, Kevin Slater said:

The $5k bond I bought in February is now showing as worth $5030, so apparently it updates after the first four months, then monthly, I'd assume.

Kevin Slater

I forgot where I read this but until you hit the 5 year mark your bond value will always show up with the 3 month interest penalty already factored in. So the amount you see will always be the actual amount you would get if you cashed it out. That would perfectly explain why it takes 4 months for it to show as having gained any value. 

Edited June 6, 2022 by BuffaloKyle

[+ goosh69]

OR…buy TIP ETFs or index funds via a normal brokerage account with no penalties or hassle.

[Kevin Slater]

12 minutes ago, goosh69 said:

OR…buy TIP ETFs or index funds via a normal brokerage account with no penalties or hassle.

I'll put up with a little hassle for 9.62%.

Kevin Slater

[+ augustus]

We have to be mindful about the National Debt.  It is now 130% of GDP.  Most economists agree that once a nation's government debt exceeds 90% of GDP there is a serious risk of default.  Just the interest expense becomes overwhelming.  So there's that to worry about too.

[Kevin Slater]

Moderator's note:  Let's keep this forum about personal finance and investing.  If you want to discuss the national or political side, please start a new thread in the politics forum.

 

[+ goosh69]

On 6/7/2022 at 12:15 AM, Kevin Slater said:

I'll put up with a little hassle for 9.62%.

Kevin Slater

I bonds pay an interest rate that is 0% plus inflation. TIPS pay a small interest rate plus inflation. In theory, if you buy  TIPS at or above par. That 9.62% will be reset ever six months to equal exactly whatever inflation is. so i bonds have a real, inflation adjusted interest rate of exactly zero over time.

Edited June 16, 2022 by goosh69

[Kevin Slater]

7 hours ago, goosh69 said:

I bonds pay an interest rate that is 0% plus inflation. TIPS pay a small interest rate plus inflation. In theory, if you buy  TIPS at or above par. That 9.62% will be reset ever six months to equal exactly whatever inflation is. so i bonds have a real, inflation adjusted interest rate of exactly zero over time.

Yup, currently.  At times, I-bonds have paid above inflation.  There's two components of an I-bond rate, the base rate plus the inflation rate.  Just that currently the base rate is 0%.

Kevin Slater

[handiacefailure]

On 6/6/2022 at 10:23 AM, BuffaloKyle said:

I forgot where I read this but until you hit the 5 year mark your bond value will always show up with the 3 month interest penalty already factored in. So the amount you see will always be the actual amount you would get if you cashed it out. That would perfectly explain why it takes 4 months for it to show as having gained any value. 

That's correct.  Suze Orman talked about it on her podcast recently.   It shows how much you'll get if you cash it out today.