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58 minutes ago, jawjateck said:

I assumed the fixed component would rise based on the actions of the Federal Reserve, and given the rate path they continue to pursue, it will likely bump up again May 2023. I will buy more in January, but hold back some of the 10k until the third week of April to check out the effect of Fed rate increases and the CPI numbers. Then decide if the rest should be bought in April or May. Congrats to all you 9.62%-ers!!!!!

Same here  I'll buy the individual 10,000 in January and see what happens with rates and  inflation if by the $10,000 one for my trust in April or may  who knows by then I bonds might not be the best choice for investing

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I just read on treasury direct that when you cash in your i bonds you can choose to cash in only part of it as well. Any amount $25 or more as long as long as the remaining value is at least $25. That really is good as when I eventually someday start to cash it out I don't have to cash out so much as to put me into a higher tax bracket:

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.

Edited by BuffaloKyle
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  • 4 weeks later...

So it turns out the current rate (6.89%) is better than the previous 9.62% due to the fixed rate component (.4% vs 0%).  In just four years the "lower" rate new issues will be worth more than the previous batch, as the .4% is guaranteed for the life of the bond. 

https://finance.yahoo.com/news/pays-procrastinate-6-89-bonds-175401666.html

Kevin Slater

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13 hours ago, Kevin Slater said:

So it turns out the current rate (6.89%) is better than the previous 9.62% due to the fixed rate component (.4% vs 0%).  In just four years the "lower" rate new issues will be worth more than the previous batch, as the .4% is guaranteed for the life of the bond. 

https://finance.yahoo.com/news/pays-procrastinate-6-89-bonds-175401666.html

Kevin Slater

I'll get my $10k allotment once January rolls around when I'm allowed to buy more. With a rail strike potentially coming next month inflation might get rougher again. 

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This may change, but I'm viewing I bonds as my new inflation hedge/place to park emergency funds for the next couple years. 

Eventually plan to build up a sizeable war chest for rainy day - oh crap, then rotate some of the 0% fixed bonds into higher fixed rates as the penalties age out. 

That plan may change in a few years, but for now, it's better than a CD and I'm viewing these as the last resort funds.  As long as you can tolerate locking it away for the first 12 months, it's not a bad option for nearline funds. 

As for taxable income, if I have to cash them, tax should be the least of my concerns in the near term. 

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  • 3 weeks later...
59 minutes ago, BuffaloKyle said:

How many of you guys are gonna get another $10k next month? All of us who bought i bonds this past summer can buy more in January. With the interest rate on them still better than my high interest savings account which is at 3.75% I'll buy another round.

Not us, we've already bought our gift bonds (all at the 9.6ish% rate) back in the summer that will take us through 2024.  Not knowing how bond yields will go after that, I'm not going to buy any more.

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3 hours ago, BuffaloKyle said:

How many of you guys are gonna get another $10k next month? All of us who bought i bonds this past summer can buy more in January. With the interest rate on them still better than my high interest savings account which is at 3.75% I'll buy another round.

I'll probably buy $5k in January, another $5k with my tax refund, and then see the rate announcement in late April before deciding whether to buy the third tranche in April or May.

Kevin Slater

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6 hours ago, BuffaloKyle said:

How many of you guys are gonna get another $10k next month? All of us who bought i bonds this past summer can buy more in January. With the interest rate on them still better than my high interest savings account which is at 3.75% I'll buy another round.

I am planning another round next year.  I'm viewing I bonds as my eventual last resort emergency funds.  I never thought I'd be back in US savings bonds, but here we are.  

I'll stagger the amounts throughout the year so if/when the fixed interest rates inch higher, I'll step the older bonds into newer rates in the future.  

Borrowing from The Grand Budapest Hotel... I-Bonds will be my "Whiskey and whores" funds into my 60s with any luck. 

Edited by BeamerBikes
Grammar
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12 hours ago, handiacefailure said:

I'll buy $10K in January and wait until the April announcement to decide when to buy the other $10K.

Thinking there's a chance the new May rate is higher than the current?  Isn't that 'highly' unlikely?  

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4 hours ago, Bucky said:

Thinking there's a chance the new May rate is higher than the current?  Isn't that 'highly' unlikely?  

I want to see what happens with the fixed rate portion as well, especially I want to hold the bonds for a long time.

Also, who knows what will happen with the stock market and other investments.   In april or May I may want to invest the money in something else.

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  • 3 weeks later...
8 minutes ago, rojjodc said:

Their customer service is atrocious.  I've been trying to get my account unlocked and you have to call - the wait times are at least 1-2 hours and they don't even offer call backs.

Yeah, it's a smaller government agency that's been making due with less since the 80s and now all the boomers are retiring.  It's next to impossible to scale to demand in older private companies, I can't imagine how the Treasury has been managing with this demand.

I'm sure the purchase limits on iBonds are in place to prevent the government from competing with private banks and the stock market/investment industry.   I'll tolerate it the poor customer service for the stability.  There's very little overhead / no service fees other than the 12 month lock in and 3 month early withdrawal penalty.  In exchange, there's going to be some customer service pains. 

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49 minutes ago, Kevin Slater said:

Just bought that first tranche.

Kevin Slater

I'm gonna buy the whole 10k worth next week sometime as you get interest for the entire month anyway no matter when you buy it. The one article a couple posts above said possibly do what you are doing buy 5k now and see what happens in May. But I don't see the rate really changing much and it'd be the fixed rate that would be the major factor.

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20 hours ago, handiacefailure said:

I bought $10K Monday.   I'm waiting until April on the next $10K

Suze Orman on her podcast today recomended waiting until April and buying a three month Treasury Bill.

I need to get my $7500 in my Roth funded anyway first.   

Are you buying these all in your name?  If that's the case you've already hit your limit for buying them online this year unless you have some tax refund money that you can buy some up to $5000 for a physical bond.

And why would you wait until April to buy a 3 month treasury bill?  Why not buy one now and when it matures in April, do it again?  I don't understand her reasoning of waiting...if you have the money in hand now.

Edited by Jim_n_NYC
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6 hours ago, Jim_n_NYC said:

Are you buying these all in your name?  If that's the case you've already hit your limit for buying them online this year unless you have some tax refund money that you can buy some up to $5000 for a physical bond.

And why would you wait until April to buy a 3 month treasury bill?  Why not buy one now and when it matures in April, do it again?  I don't understand her reasoning of waiting...if you have the money in hand now.

I have a revocable living trust and the trust can buy $10K a year and individually I can buy $10K.   I use the same bank account to fund them but I have to have one account in the name of the trust and one in my name.   

Sorry about the way I worded it about Suze.    She recommends buying a 3 month treasury now to earn the interest and waiting to see what happens in April before buying an Ibond, so basically just parking your money in a Treasury for three months.

 

 

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40 minutes ago, handiacefailure said:

I have a revocable living trust and the trust can buy $10K a year and individually I can buy $10K.   I use the same bank account to fund them but I have to have one account in the name of the trust and one in my name.   

Sorry about the way I worded it about Suze.    She recommends buying a 3 month treasury now to earn the interest and waiting to see what happens in April before buying an Ibond, so basically just parking your money in a Treasury for three months.

 

 

Gotcha.  I've been doing the 3-month T-bill thing for while...at least since last summer (though probably winter).  My last buy was at an effective yield of about 4.5%.

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I'm not sure if you guys are aware, but 5-10 year Treasury TIPS currently pay a "real" or "fixed rate" of 1.25%-1.30% plus the inflation rate.  I say currently because the bond market decides what the fixed rate is and it changes all the time. 

IMPORTANTLY, these bonds will fluctuate in bond price value until they reach maturity, at which time the fixed rate plus the CPI will be credited in full but in the meantime there will be price fluctuations in the par value (not the case with Savings Bonds).

ALSO important is that you should buy these bonds at auction or the most recent auction.  There's a reason for that but it's too complicated to go into.

In SUMMATION, if you buy a 5 year TIPS at the next auction and the market decides to buy these bonds at a fixed rate of say 1.25%, then in 5 years you will get the 1.25% yearly PLUS the CPI adjustment yearly at maturity.  AGAIN, these bonds fluctuate in value so if you don't hold them to maturity you could have a problem.

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