Thoughts?

I'm really considering buying my max of these every year. Seems like a pretty safe play and diversification tool.

Thanks in advance.

How long do you want to hold them and what do you forecast the real rate of inflation to be during that term? I worry that the Fed will inflate away our national obligations, meaning debt holders will get crushed in real terms along with benefit recipients (yes, you'll get the nominal returns promised, but they won't be worth near as much in purchasing power as expected at the outset ...)

I'm going to Redstone the hell out of this thread as I heard about these first almost a year ago.

https://texags.com/forums/57/topics/3201797/replies/59384122

Not sure about doing these every year. Will depend on interest rate going forward. Could tank back to nothing over time. Just have to watch that.

However, at its current rate it's a great option for short to medium term cash savings where you want to 100% protect principal and try to stay ahead of inflation.

Rate changes in 9 days if I'm reading the website right? Where do I find what it will be?

I believe the current estimate is 9.62%.

Since it's pegged to inflation, and I don't expect inflation to slow down for a few years, I think they're a nice place to park some cash. As long as you don't need the money within a year or 5 ideally.

Plus it's only $10k a year per account.

I actually purchased my 1st $10k yesterday.

I'm waiting for May 2 to jump in, but I'll be putting in the full $10k for both me and my wife. It will definitely be a rate greater than 9 percent.

Fedup said:

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I believe the current estimate is 9.62%.

Since it's pegged to inflation, and I don't expect inflation to slow down for a few years, I think they're a nice place to park some cash. As long as you don't need the money within a year or 5 ideally.

Plus it's only $10k a year per account.

I actually purchased my 1st $10k yesterday.

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Stupid question but if we expect 9% next week and the rate only adjusts each 6 months, is there a reason you bought yesterday for 7% instead of waiting a few days?

The 5 years is because you have to forfeit last 3 months interest if disposed earlier?

Keep in mind the rate on I bonds is a composite of fixed and variable components. Unfortunately, the fixed rate has been 0% and is expected to remain that way in the near term. The variable piece adjusts every 6 months and will float up and down with inflation.

Still should protect purchasing power in near-term, but these are not "locked in" like I hear of lot of folks asking/thinking.

Thanks, makes a lot of sense. You are front loading rate as much as possible under the assumption it goes down over time. And if it happens to go up you just hold longer

Gonna buy some $6k or so once the new May rate kicks in.

I imagine it's gonna go even higher than the current rate, right?

Edit: Reading more closely I see I would lock in the new 9.6% rate for the subsequent six months (after the initial six months) if I buy right now. So it might actually be a safer bet to lock up these rates, since it might fall below 7.12% in November. Thoughts?

Brian Earl Spilner said:

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Gonna buy some $6k or so once the new May rate kicks in.

I imagine it's gonna go even higher than the current rate, right?

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It's supposed to come in around 9.6%.

Ok here's another weird question, say I buy $5k in April and another $5k in May, does it all get the rate I locked in for April or does the second $5k go in at the May rate?

Brian Earl Spilner said:

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Gonna buy some $6k or so once the new May rate kicks in.

I imagine it's gonna go even higher than the current rate, right?

Edit: Reading more closely I see I would lock in the new 9.6% rate for the subsequent six months (after the initial six months) if I buy right now. So it might actually be a safer bet to lock up these rates, since it might fall below 7.12% in November. Thoughts?

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That is the correct line of thought.

Brian Earl Spilner said:

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Ok here's another weird question, say I buy $5k in April and another $5k in May, does it all get the rate I locked in for April or does the second $5k go in at the May rate?

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In April. 7.12% for 6 months and then 9.64% for 6 months
I'm May 9.64% for 6 months and then what ever the rate adjusts to for another 6 months.

K that's what I figured. Thanks. Might do that then.

dirkjones said:

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GE said:

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Fedup said:

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I believe the current estimate is 9.62%.

Since it's pegged to inflation, and I don't expect inflation to slow down for a few years, I think they're a nice place to park some cash. As long as you don't need the money
within a year or 5 ideally.

Plus it's only $10k a year per account.



I actually purchased my 1st $10k yesterday.

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Stupid question but if we expect 9% next week and the rate only adjusts each 6 months, is there a reason you bought yesterday for 7% instead of waiting a few days?

The 5 years is because you have to forfeit last 3 months interest if disposed earlier?

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Basically because if you buy this week you are getting known rates for 12 months. 7.12 for 6 months and then 9.64 for another 6 months. Both good rates. Eventually rates will go down but now you have a 12 month timeline versus a 6 month timeline if you wait until May to buy.

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Not to mention of you'll get that nice 9.64 rate after 6 months of compounded interest added.

Is treasury direct the only day to buy them?

drred4 said:

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Is treasury direct the only day to buy them?

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Yes

When you cash in I-bonds after the 12 month+ holding period, are you taxed at your federal income bracket for that year on the total gains? Also it looks like you don't get get the tax savings for qualified educational expenses if you are over the $98,200 ($154,800) AGI? Is that right?

You can take the interest expense annually on your tax return or elect to defer until you cash out.

Man, I'm feeling good about those bonds I just purchased. This market...

I have a question here: If I buy one under my daughter's SSN (she's 9 years old), will we have to file a tax return for her for the interest accrued?

Fellas, quick questions for those who have purchased these --

Let's say a married couple purchases $20,000 in I-Bonds.

1. Is that one $20,000 bond in two names, or two $10,000 bonds with one name each?

2. Is there a POD/TOD (Pay on Death/Transfer on Death) or beneficiary provision in the bond agreement? Or, instead, if you bite the dust will the bond need to go into your estate for your executor to handle, rather than just passing directly upon presentation of a death certificate by the beneficiary?

Thanks.

I know many overpay income taxes on credit card to get a signup bonus (and other churning ) strategies. Is this a viable backdoor strategy to purchase additional I-bonds (paper) with refund?

Assumes taxpayer filed an extension