I-bond manifesto

[Anonymous]

Anonymous wrote:So if I buy an iBond by the end of the month (Thursday), I'll get an entire month's worth of 3.54% annual interest, right?

When the rate is reset on Nov. 1, will interest then accrue at the new rate? With inflation pretty high, any thoughts if this will go above 3.54?

Sorry for the basic questions, but this is all new to me.

Yes— although the purchase has to go thru by the end of the month so if you buy it on Thursday, for example, it may not process in time for September.

Also you will get the current interest rate for six months and then your bond’s interest rate will reset to whatever the “November” interest rate is in March (and then the interest rate on your bond will reset to the “May” interest rate beginning in September).

Here is a website suggesting the next interest rate could be above 6%

https://tipswatch.com/2021/09/14/august-inflation-what-it-means-for-social-security-cola-i-bonds-and-tips/

[Anonymous]

Anonymous wrote:

Anonymous wrote:So if I buy an iBond by the end of the month (Thursday), I'll get an entire month's worth of 3.54% annual interest, right?

When the rate is reset on Nov. 1, will interest then accrue at the new rate? With inflation pretty high, any thoughts if this will go above 3.54?

Sorry for the basic questions, but this is all new to me.

Yes— although the purchase has to go thru by the end of the month so if you buy it on Thursday, for example, it may not process in time for September.

Also you will get the current interest rate for six months and then your bond’s interest rate will reset to whatever the “November” interest rate is in March (and then the interest rate on your bond will reset to the “May” interest rate beginning in September).

Here is a website suggesting the next interest rate could be above 6%

https://tipswatch.com/2021/09/14/august-inflation-what-it-means-for-social-security-cola-i-bonds-and-tips/

Thank you. Very helpful.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:you can get another 5k (total of 15k) using fed tax return.

I wish they would just allow you to do that electronically via treasury direct rather than just paper bonds!

Their website seems even more archaic than handling paper bonds. Any common complaints dealing with treasury direct?

Some people like to complain about it but I have never had a problem. You do have to remember that you can't use the "back" button on your browser or you will be kicked out, and it prompts you for a one-time passcode (a second password that is emailed to you) if you go more than a month or two between log ins. Generally it works well and is pretty straightforward. I would link a bank account you intend to keep for a while because I think to add or change a bank account may require a medallion signature guarantee on a form and that can be a pain to get sometimes.

I don't get the paper ibonds from tax returns because at this point I'd much rather deal with TD than paper bonds but ymmv (it's not that hard to send in paper bonds to be "converted" to electronic ibonds but it hasn't seemed necessary/worthwhile to me).

I've only used the webstite to purchase I bonds a couple of times. No issues. It does seem very basic but as a tax payer I appreciate it isn't super fancy (i.e. expensive). It does the job. What else does it need to do?

basic =/= cheap
fancy =/= expensive

Did you have a point besides critiquing my vocabulary?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:you can get another 5k (total of 15k) using fed tax return.

I wish they would just allow you to do that electronically via treasury direct rather than just paper bonds!

Their website seems even more archaic than handling paper bonds. Any common complaints dealing with treasury direct?

Some people like to complain about it but I have never had a problem. You do have to remember that you can't use the "back" button on your browser or you will be kicked out, and it prompts you for a one-time passcode (a second password that is emailed to you) if you go more than a month or two between log ins. Generally it works well and is pretty straightforward. I would link a bank account you intend to keep for a while because I think to add or change a bank account may require a medallion signature guarantee on a form and that can be a pain to get sometimes.

I don't get the paper ibonds from tax returns because at this point I'd much rather deal with TD than paper bonds but ymmv (it's not that hard to send in paper bonds to be "converted" to electronic ibonds but it hasn't seemed necessary/worthwhile to me).

I've only used the webstite to purchase I bonds a couple of times. No issues. It does seem very basic but as a tax payer I appreciate it isn't super fancy (i.e. expensive). It does the job. What else does it need to do?

basic =/= cheap
fancy =/= expensive

Did you have a point besides critiquing my vocabulary?

i was critiquing your voc. rather your logic

[Anonymous]

Wow, no wonder they limit you to $10k. Otherwise you could just lazily throw $100k into ibonds and crank out 6% returns risk free.

[Anonymous]

So, if I invest today will I still get the 6% or is that only if I invest after November 1? Never invested in these and want to start this year.

[Anonymous]

Anonymous wrote:So, if I invest today will I still get the 6% or is that only if I invest after November 1? Never invested in these and want to start this year.

If you invest today you will get six months at 3.54% and then six months at 6%. If you wait until November you will get 6% for six months and then a different rate for six months which will be determined in May based on inflation between November and April. You can’t cash in the bond sooner than 1 year and you lose 3 months of interest if you cash in sooner than 5 years (so that might drop the blended interest rate for a bond held one year a little, say from 5% to a little under 4%).

[Anonymous]

Anonymous wrote:

Anonymous wrote:So, if I invest today will I still get the 6% or is that only if I invest after November 1? Never invested in these and want to start this year.

If you invest today you will get six months at 3.54% and then six months at 6%. If you wait until November you will get 6% for six months and then a different rate for six months which will be determined in May based on inflation between November and April. You can’t cash in the bond sooner than 1 year and you lose 3 months of interest if you cash in sooner than 5 years (so that might drop the blended interest rate for a bond held one year a little, say from 5% to a little under 4%).

Thanks!

[Anonymous]

I have to say, this may be the only helpful, coherent thing ever posted in the money forum. Stuff like this is the reason I come to this forum. Thank you all!

[Anonymous]

Anonymous wrote:I have to say, this may be the only helpful, coherent thing ever posted in the money forum. Stuff like this is the reason I come to this forum. Thank you all!

+1. Thank you very much for this! Just opened a Treasury Direct acct. Wow the interface is annoying—but worth $345 for sure!

[Anonymous]

Looks like the new six month rate will be 7.12% (annualized)

https://tipswatch.com/2021/10/13/inflation-report-sets-i-bonds-inflation-adjusted-rate-at-7-12-and-social-security-cola-at-5-9/

[Anonymous]

Can we invest in these bonds in kids' names? Will that constitute a gift? We already contribute to their 529 (30K/yr per kid) to stay within the gift tax limits.

[Anonymous]

Anonymous wrote:Can we invest in these bonds in kids' names? Will that constitute a gift? We already contribute to their 529 (30K/yr per kid) to stay within the gift tax limits.

Yes, it is a gift just like your 529 contributions and any other money you transfer to their name.

[Anonymous]

So, I bought it in January of 2021, I guess I made a mistake? When would be the best month to buy for 2022?

[Anonymous]

Anonymous wrote:So, I bought it in January of 2021, I guess I made a mistake? When would be the best month to buy for 2022?

You didn't really make a mistake, the rates shift regularly.