iBonds for kids accounts

[Anonymous]

Does it make sense to put $10K into each of our kids' iBond accounts? One in college and one just started working. I was thinking iBonds because of its liquidity, income sheltering/tax deferral for 30 years, and a return that is at least what a decent bank pays for short term funds. If I were to invest in the stock market, I'd have to deal with volatility and taxes.

Thoughts?

[Anonymous]

I think it's a good idea if you want something stable that you might want to tap in the next 5 years or so (say for a downpayment or grad school).

If you saw it as more of a supplement to retirement savings (or grandkid education) then sticking it in the market would probably make more sense.

[Anonymous]

Anonymous wrote:I think it's a good idea if you want something stable that you might want to tap in the next 5 years or so (say for a downpayment or grad school).

If you saw it as more of a supplement to retirement savings (or grandkid education) then sticking it in the market would probably make more sense.

Thanks for the response. No short-term need..This money is meant to sit in the iBond account for as long as needed, hopefully 30 years, and tapped by the owners (my kids). I was hoping to take advantage of the annual $10K limit with the iBonds, especially when there is a fixed rate available.

We do invest in the market with the rest of our funds (Brokerage and tax-deferred) and these will eventually be inherited by the kids (assuming the funds outlive us).

[Anonymous]

I hate iBonds. We had them but dealing with Treasury Direct was a drag. I got locked out of my account due to their crap website and it took Sen Warner constituent services to get them to fix it.
I cashed everything when Doge showed up and put it in Treasury ladder in Vanguard. Very easy to.work with.

[Anonymous]

One is a grown up and one started working. What tax do you think they pay earning under $20k a year plus some interest?
You are losing money to money printing.
Let them put the money into a decent ETF in an investment account and used it when they need it. Investment account has liquidity and taxes are no concern until the kids start making the big money.
Teach them to DCA, to do the research into what to buy, and what bank to choose.
Imagine VOO being $4k 20 years from now while their $10k sits in Ibonds.

[Anonymous]

No, it's not a good long term investment. Scared money doesn't make money. Invest in VT or VTI.

[Anonymous]

Anonymous wrote:No, it's not a good long term investment. Scared money doesn't make money. Invest in VT or VTI.

Ditto, having any money invested in fixed income with a 30 year time horizon is just stupid.

[Anonymous]

You can hold them for 5 years to cash in on the MAGA 10-12% inflation that's coming. But holding long term seems wasteful, these are just meant to keep your money ahead of inflation.

[Anonymous]

Anonymous wrote:I hate iBonds. We had them but dealing with Treasury Direct was a drag. I got locked out of my account due to their crap website and it took Sen Warner constituent services to get them to fix it.
I cashed everything when Doge showed up and put it in Treasury ladder in Vanguard. Very easy to.work with.

+1 My kids have about $5k each in iBonds (paper certificates) and about $15k in treasury direct....this stuff is so confusing. I have to get that all of there and put where I can get to it easily.

[Anonymous]

Fixed income isn’t a good long term investment. Even as a short term investor (you have tuition payments next year), I don’t love Ibonds due the their funky hold period rules

[Anonymous]

Give them money to fully fund their Roth IRAs (if they’re not already.)

[Anonymous]

Anonymous wrote:Give them money to fully fund their Roth IRAs (if they’re not already.)

This or just VOO, VT or VTI. Let those grow over the next decade or so and they will be so far ahead. iBonds are such a pain and really don't make a substantive difference in their lives.