I-bonds

[handiacefailure]

4 hours ago, BuffaloKyle said:

Just saw on the treasury direct site:

• The Virtual Keyboard will be removed the week of May 7th to improve the customer experience.

Yay! I hate entering my password with that thing! I read awhile back too but didn't post on here they made it easier to change your banking information as well.

I hated the virtual keyboard.

Can you change your banking info online now?   I recently opened up a checking account with a new bank and am keeping my old one mainly because it's conneccted to my treasury direct account.

I wish it was easier to add a beneficiary to your Ibonds.

[+ augustus]

A friend told me he mailed old, matured savings bonds about 2 weeks ago to be redeemed and direct deposited into his bank account.  It is taking up to 3 months for the government to process this request because they are so backed up. 

[handiacefailure]

First part of Suze Orman's podcast today was on I-bonds and was really informative.   Especially for people who are out of the five year interest penalty window.

 

I bought a $10K one in January but am holding off on my second one and think I'm going to do a CD ladder with some money and see what happens with treasury itnerest rates.   She seems to think they could go up since the US government has to cover the new debt ceiling   

[Jim_n_NYC]

12 hours ago, handiacefailure said:

First part of Suze Orman's podcast today was on I-bonds and was really informative.   Especially for people who are out of the five year interest penalty window.

 

I bought a $10K one in January but am holding off on my second one and think I'm going to do a CD ladder with some money and see what happens with treasury itnerest rates.   She seems to think they could go up since the US government has to cover the new debt ceiling   

I just put in an order on 3-mo treasuries this morning at a listed rate of 5.19%.  So, the annualized compounded return will be more than that...probably about a full % point above the current I-bond rate.

[handiacefailure]

On 6/5/2023 at 9:41 AM, Jim_n_NYC said:

I just put in an order on 3-mo treasuries this morning at a listed rate of 5.19%.  So, the annualized compounded return will be more than that...probably about a full % point above the current I-bond rate.

Did the same thing.   And I live in a state with a high tax rate so it's nice there is no state income tax either.   

And it's a lot easier to buy treasury's now that you can add a bank account online without going through the BS of getting the seal from a bank.

[Bokomaru]

So many money market funds are paying between 4.5% - 5% now. And they are completely liquid.  So if locking your money up in an ibond or CD is an issue, MMFs are a great option, practically risk free. A fee is involved, true but only about 0.2% usually. (Note I’m taking about money market *funds* not accounts.)

[handiacefailure]

5 hours ago, Bokomaru said:

So many money market funds are paying between 4.5% - 5% now. And they are completely liquid.  So if locking your money up in an ibond or CD is an issue, MMFs are a great option, practically risk free. A fee is involved, true but only about 0.2% usually. (Note I’m taking about money market *funds* not accounts.)

If you are going to do a MMF you are better off just doing a 30 or 60 day treasury, especially if in a state that has a high state tax rate.   While not totally liquid, most people won't need access to their fund in 30 days anyway.

Something to be careful of with a MMF as well is it is considered an investment and not a deposit account so not FDIC insured like a regular money market.   There is some other kind of coverage but can't remember all the details.   There have been reports of MMF's dropping in value as well but it's usually only for a day or two and they recover.

 

[Bokomaru]

6 hours ago, handiacefailure said:

If you are going to do a MMF you are better off just doing a 30 or 60 day treasury, especially if in a state that has a high state tax rate.   While not totally liquid, most people won't need access to their fund in 30 days anyway.

Something to be careful of with a MMF as well is it is considered an investment and not a deposit account so not FDIC insured like a regular money market.   There is some other kind of coverage but can't remember all the details.   There have been reports of MMF's dropping in value as well but it's usually only for a day or two and they 

 

I agree, short term treasuries are a good option. Personally I don’t want the hassle of moving money between my brokerage and TreasuryDirect accounts.  A lot of my cash is temporary and the liquidity of MMF’s is a plus. 

Not insured? Misleading. MMFs are comprised of treasuries in most cases, so are just as safe as what you recommend.  

Tax advantaged MMFs exist for people like me (I live in a high tax state).

Lose value? Agree, possible, if you mean that they go down to 99.9 cents to the dollar for a day.

The purpose of my post wasn’t to say MMFs are the best investment. No investment is the best. Rather I wanted to educate casual investors, who are considering ibonds, the topic of this thread, because MMFs are a good option in case liquidity is an issue. I suspect many people don’t know MMFs exist because they confuse MM funds (safe, liquid, **has earnings**, super convenient) with MM accounts (which earn almost nothing).

I agree that buying treasuries directly is a fine option. But I wonder how many people use E*trade and similar, with cash sitting in that account, ready to invest. Maybe they dollar-cost-average, or try to time their stock purchases. Meanwhile that money is earning nothing when it could be in a MMF comprised of treasuries. 

Correction to my earlier post: MMFs are not “completely liquid.” Like any fund, the transaction occurs at the end of the day, rather than instantaneously.
 

Happy investing!
 

 

[+ Lucky]

Could someone please indulge my lack of knowledge here? I bought my I-bond on May 9, 2022.  I understand I cannot cash it in for three months after the first  year without penalty. So if I cash it in on August 9th, do I get all the interest earned to that date?

[handiacefailure]

9 minutes ago, Lucky said:

Could someone please indulge my lack of knowledge here? I bought my I-bond on May 9, 2022.  I understand I cannot cash it in for three months after the first  year without penalty. So if I cash it in on August 9th, do I get all the interest earned to that date?

You have to hold it for a year before you can even touch it and then you lose the prior three months of interest.

Suze Orman explained it in her podcast a few weeks ago how it worked and it may be on her website as to how they figure it.

From everything I've heard if you look at the value of the ibond on treasury direct it has the interest penalty figured in and whatever value is listed is what you would get if you cashed the bond in today.

[Jim_n_NYC]

1 hour ago, Lucky said:

Could someone please indulge my lack of knowledge here? I bought my I-bond on May 9, 2022.  I understand I cannot cash it in for three months after the first  year without penalty. So if I cash it in on August 9th, do I get all the interest earned to that date?

During the first 5 years you own the bond, you will lose the last three months of interest if you cash it in.  You also do not earn interest in the month that you cancel the bond.  When they post the interest earned each month, those four months are already figured into, which is why no interest posts to the account until the 1st day of the 5th month of ownership.

I like the way this woman explains this stuff much better than Suzie.  The interest and its accrual is explained starting at 3:30.

 

[+ Lucky]

On 6/17/2023 at 7:51 AM, Lucky said:

Could someone please indulge my lack of knowledge here? I bought my I-bond on May 9, 2022.  I understand I cannot cash it in for three months after the first  year without penalty. So if I cash it in on August 9th, do I get all the interest earned to that date?

My account shows no interest earned at all, 15 months after purchase.

[Kevin Slater]

42 minutes ago, Lucky said:

My account shows no interest earned at all, 15 months after purchase.

Drill down a bit.  On the main page (where it appears just to show your purchase price), click on the savings bonds link under current holdings.  There you should see the current total.  If you want more detail, click on the radio button next to Series I Savings Bond and hit submit.

Kevin Slater

[+ Lucky]

Thanks @Kevin Slater

I have $820 in interest!

[jawjateck]

September CPI was released this morning. So I geeked out, crunched the numbers, and made my guess about the I-bond rate that will be announced November 1. So here's my estimate:

The I bond rate will be 5.17%, but that includes my wild guess that the fixed component will rise from 0.9% to 1.2%. I'll circle back to this in 3 weeks and evaluate the accuracy of my prophecy. 😋

[+ FrankR]

21 hours ago, jawjateck said:

September CPI was released this morning. So I geeked out, crunched the numbers, and made my guess about the I-bond rate that will be announced November 1. So here's my estimate:

The I bond rate will be 5.17%, but that includes my wild guess that the fixed component will rise from 0.9% to 1.2%. I'll circle back to this in 3 weeks and evaluate the accuracy of my prophecy. 😋

I could not resist…did the math myself but arrived at a slightly different answer. For me it comes to 4.92% for November.  Bottom line: if you are thinking of buying…I would wait until November. 
 

(These comments are informational only and should not be considered personal financial advice. Get personalized advice before you invest. Or blame @jawjateck instead for pulling me down the rabbit hole with him! 😆)

[BuffaloKyle]

This article is predicting the same as you guys have said. They think the variable rate next month will go from 3.38% to 3.94% and that the fixed rate will go up as well from the 0.9%

https://www.msn.com/en-us/money/savingandinvesting/series-i-bonds-rate-could-top-5-in-november-heres-what-to-know-before-buying-more/ar-AA1ij16y

I have to wait until January to buy one as I spent 10k on one this past January with the 0.4% fixed rate.

Edited October 17, 2023 by BuffaloKyle

[+ augustus]

The new fixed rate for I-Bonds purchase from November 1, 2023 thru April 30, 2024 is 1.30% plus the inflation rate.  At least your purchasing power is maintained and a 1.30% rate of return on top of that.  Savings Bonds are really a long term investment IMHO.   

 

Treasury Department announces new Series I bond rate of 5.27% for the next six months

WWW.CNBC.COM

---

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

 

[jawjateck]

Well shucks.....my prediction was off by 10 basis points...

[BuffaloKyle]

Once January comes around I'll buy my $10k max. With that fixed interest rate it's a good long term investment option when the fed eventually starts cutting the interest rate in a couple years.

[handiacefailure]

On 10/17/2023 at 8:32 AM, BuffaloKyle said:

This article is predicting the same as you guys have said. They think the variable rate next month will go from 3.38% to 3.94% and that the fixed rate will go up as well from the 0.9%

https://www.msn.com/en-us/money/savingandinvesting/series-i-bonds-rate-could-top-5-in-november-heres-what-to-know-before-buying-more/ar-AA1ij16y

I have to wait until January to buy one as I spent 10k on one this past January with the 0.4% fixed rate.

Set up a trust and you can buy another $10K in the name of the trust.   A trust is something everyone should have IMHO anyway and you can just use your SSN, you don't need a EIN for the trust for the Ibond, you just have to set up a second account and buy it in that.

I think I'm holding off on Ibonds.   I'm making over 5.25 percent on thirty day treasury's but the fixed rate is tempting  

[GlenDale]

On 4/12/2022 at 7:55 AM, Kevin Slater said:

The WSJ reports that based on today's CPI numbers, I-bonds purchased from May through October 2022 will pay 9.6% interest (up from the current already generous 7.12%).  One can purchase up to $10k via TreasuryDirect.gov, plus up to an additional $5k if she chooses to receive a tax refund in the form of a paper I-bond. 

Kevin Slater

Wow, what a great thread to find here. 
maybe you guys can educate me on something.

i bought a 10k bond, 7/1/22 and another 10k, 2/1/23

they have been logging interest at 3.38% and 3.79% respectively.

how, when, why, does the reported 9.6% rate kick in?

[Pd1_jap]

1 minute ago, GlenDale said:

Wow, what a great thread to find here. 
maybe you guys can educate me on something.

i bought a 10k bond, 7/1/22 and another 10k, 2/1/23

they have been logging interest at 3.38% and 3.79% respectively.

how, when, why, does the reported 9.6% rate kick in?

The I in I-bonds standards for inflation. They do some complicated math to figure out the real rate. 

I bonds interest rates — TreasuryDirect

TREASURYDIRECT.GOV

 

Basically if inflation is high the higher your rate. If inflation is low the lower your rate. 

Always consult a certified fee only financial advisor when considering investment decisions!

[BuffaloKyle]

22 minutes ago, GlenDale said:

Wow, what a great thread to find here. 
maybe you guys can educate me on something.

i bought a 10k bond, 7/1/22 and another 10k, 2/1/23

they have been logging interest at 3.38% and 3.79% respectively.

how, when, why, does the reported 9.6% rate kick in?

You received the 9.6% the first six months of the i bond you bought in July 2022. The inflation rate changes every 6 months which is why you're getting 3.38% currently. You are getting 3.79% for the other one because when you bought that one it includes a 0.40% fixed rate on top of the inflation rate.

[GlenDale]

29 minutes ago, BuffaloKyle said:

You received the 9.6% the first six months of the i bond you bought in July 2022. The inflation rate changes every 6 months which is why you're getting 3.38% currently. You are getting 3.79% for the other one because when you bought that one it includes a 0.40% fixed rate on top of the inflation rate.

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