I Bonds are popular, from a Jaxville financial newsletter writer friend of mine

[CoachKandSportsguy]

Americans snatched up nearly $11 billion in Series I bonds over the past six months

compared with around $1.2 billion during the same period in 2020 and 2021, according to Treasury Department records.


Looks like everyone is not alone in reaching for yield during increasing inflation times.

Sure as heck beats CDs :blahblahblah: :blahblahblah: :duck:

[shut the front door]

I grabbed one last week, I think it was you who suggested it here. If so, THANKS!

[dewilson58]

Think what would happen without an annual limitation......$11B would be a drop in a bucket.

Less debt to China.

:coolsmiley:

[Robbb]

I get the 10% they are paying for the first year, but after that aren't they paying 0% for the next 4 years that you are required to hold them. Is this correct?

[dewilson58]

I get the 10% they are paying for the first year, but after that aren't they paying 0% for the next 4 years that you are required to hold them. Is this correct?

No.

[Stu from NYC]

Think what would happen without an annual limitation......$11B would be a drop in a bucket.

Less debt to China.

:coolsmiley:

But the deficit would go up by a huge amount.

[dewilson58]

But the deficit would go up by a huge amount.

No, use the new I Bond funds to pay down (or maturing) old China debt. :MOJE_whot:

[tophcfa]

No, use the new I Bond funds to pay down (or maturing) old China debt. :MOJE_whot:

Great in theory, but government doesn’t get it and won’t use proceeds to pay down debt, just spend more.

[Stu from NYC]

No, use the new I Bond funds to pay down (or maturing) old China debt. :MOJE_whot:

Borrow from Peter to pay Paul? You can do better.

[Hifred]

Looks like everyone is not alone in reaching for yield during increasing inflation times.

Sure as heck beats CDs :blahblahblah: :blahblahblah: :duck:

Yes - I bought the maximum which was $10,000 a year per person. What a great deal 7%. I bought mine a month ago. Not sure what the rate is if you purchase today. I wish I could have bought more. They are great during times of inflation.

[Hifred]

Robb, you are not correct. They are liquid after one year.

They could be one of the best cash investments you ever make. I bonds are a good cash investment because they are guaranteed and have tax-deferred, inflation-adjusted interest. They are also liquid after one year.

[Altavia]

Yes - I bought the maximum which was $10,000 a year per person. What a great deal 7%. I bought mine a month ago. Not sure what the rate is if you purchase today. I wish I could have bought more. They are great during times of inflation.

You can also purchase up to an additional $5K with a tax refund.

[dewilson58]

Borrow from Peter to pay Paul? You can do better.

Much rather have Villagers hold our debt than China.

You probably like Russian oil too.

[dewilson58]

Great in theory, but government doesn’t get it and won’t use proceeds to pay down debt, just spend more.

You know better than that............the government does not look at newly issued treasuries and then go spend. :icon_wink:

[rustyp]

I posted this synopsis 04-24-2022, 10:02 AM. The benefit of buying before the end of April was knowing the interest rates for a full year. If you buy now you know your first 6 months will be 9.62% but you won't know the second 6 month term rate until November this year.

Here is what I posted:



If you purchase an I bond before the end of this coming week(end of April) you will be guaranteed 7.12% interest for the first 6 months and then 9.62 % interest for the following 6 months. After that the rates of your bond changes every 6 months (may and nov) indexed to inflation. You must hold for one year. If cashed in between years 2 - 5 you forfeit the last three months interest. After 5 years no penalty. These I bonds are issued solely by the government. The only place to purchase is TreasuryDirect - Home. Google I Bonds on YOUTUBE - lots of videos at present.

[Stu from NYC]

Much rather have Villagers hold our debt than China. Do I need to explain economics to you?

You probably like Russian oil too.

Do I need to explain basic economics to you? Favorite oil is olive oil by the way.

[Rainger99]

If you purchase an I bond before the end of this coming week(end of April) you will be guaranteed 7.12% interest for the first 6 months and then 9.62 % interest for the following 6 months. After that the rates of your bond changes every 6 months (may and nov) indexed to inflation. You must hold for one year. If cashed in between years 2 - 5 you forfeit the last three months interest. After 5 years no penalty. These I bonds are issued solely by the government. The only place to purchase is TreasuryDirect - Home. Google I Bonds on YOUTUBE - lots of videos at present.

I know that the bonds are paying 9.62 % interest and that the rates change on May 1 and November 1. Is the 9.62% from the time you buy them? Or is it from May 1? For example, if I buy one one on October 15, do I only get the 9.62% for 16 days? Or do I get the 9.62% for six months from date of purchase - whether I buy it on May 1 or October 31?

[dewilson58]

Do I need to explain basic economics to you?.

:1rotfl::1rotfl::1rotfl:

[rustyp]

I get the 10% they are paying for the first year, but after that aren't they paying 0% for the next 4 years that you are required to hold them. Is this correct?

I know that the bonds are paying 9.62 % interest and that the rates change on May 1 and November 1. Is the 9.62% from the time you buy them? Or is it from May 1? For example, if I buy one one on October 15, do I only get the 9.62% for 16 days? Or do I get the 9.62% for six months from date of purchase - whether I buy it on May 1 or October 31?

Believe it or not the way it works is whatever the present 6 months rate is at the time of purchase that is the rate you get for the next 6 months while you hold the bond. Thus a bond purchased at the end of April will expire just prior to Nov this year. End of April - end of Oct will be 7.2%. Well the 6 month expiration is now just prior to the Nov 2022 announcement thus you get the May rate (9.62%) for the next 6 months. Couple this to the idea you can cash out after one year (with last 3 months interest forfeited as penalty since 5 years are not up) you know exactly what you are getting for a whole year with no unknown risk. Hope it helped. Hard to put into words. Go watch a youtube video. There is a lot of them on this subject. Search I bonds for beginners.

[Blueblaze]

Gee thanks, Uncle Sam!

So you're saying I can get a tenth of the real inflation rate, on $20k of the nest egg that took us 30 years to save? Wow, that's almost as much as a burger flipper makes! Let's see, when you let me have it back, five years of 100% inflation from now, that'll be worth, what, one month's groceries and CDD fees? Gee, a whole other month before we go on the Alpo diet!

And I thought you were mad at me or something!

But howcome only $20K? Since all it costs you is funny money, anyway, why not let us do the whole thing? Even 10% is better than playing Wall Street Roulette!

[Rainger99]

Believe it or not the way it works is whatever the present 6 months rate is at the time of purchase that is the rate you get for the next 6 months while you hold the bond. Thus a bond purchased at the end of April will expire just prior to Nov this year. End of April - end of Oct will be 7.2%. Well the 6 month expiration is now just prior to the Nov 2022 announcement thus you get the May rate (9.62%) for the next 6 months. Couple this to the idea you can cash out after one year (with last 3 months interest forfeited as penalty since 5 years are not up) you know exactly what you are getting for a whole year with no unknown risk. Hope it helped. Hard to put into words. Go watch a youtube video. There is a lot of them on this subject. Search I bonds for beginners.
Thanks!!

[rustyp]

[QUOTE=Blueblaze;2091758]Gee thanks, Uncle Sam!

So you're saying I can get a tenth of the real inflation rate, on $20k of the nest egg that took us 30 years to save? Wow, that's almost as much as a burger flipper makes! Let's see, when you let me have it back, five years of 100% inflation from now, that'll be worth, what, one month's groceries and CDD fees? Gee, a whole other month before we go on the Alpo diet!

And I thought you were mad at me or something!

But howcome only $20K? Since all it costs you is funny money, anyway, why not let us do the whole thing? Even 10% is better than playing Wall Street Roulette![/QUOTE

One reason is the government does not want mass exodus from the stock market every time there is a hiccup. It would collapse the economy.

There is a way for a married couple to do up to $45K per year . Not easy but possible. I know we have been raised in the I want it all and I want it now society but if one would have started and maxed out a few years back the nest egg getting a little bigger. So if it is so insignificant as many complain max out what you can today. If it is insignificant it won't put a dent into whatever sure fire investment scheme you've discovered. Just a little tiny bit of insurance.

[laceylady]

Looks like everyone is not alone in reaching for yield during increasing inflation times.

Sure as heck beats CDs :blahblahblah: :blahblahblah: :duck:

Do you buy them on the internet, from a bank or from an investment advisor? Also, when it is time to redeem them, where do you do this?

[retiredguy123]

Do you buy them on the internet, from a bank or from an investment advisor? Also, when it is time to redeem them, where do you do this?
You can only buy them from the U.S. Treasury with a Treasury Direct account. To me, that is an obstacle. Also, the $10K annual purchase limit makes it not worth the effort for a lot of investers.

[rustyp]

You can only buy them from the U.S. Treasury with a Treasury Direct account. To me, that is an obstacle. Also, the $10K annual purchase limit makes it not worth the effort for a lot of investers.

The Treasury Direct website (I know this will be hard to believe) was easy peasy. I set up an account and purchased an I bond in less than 10 minutes with no confusion.

[M2inOR]

The Treasury Direct website (I know this will be hard to believe) was easy peasy. I set up an account and purchased an I bond in less than 10 minutes with no confusion.
Same here. Online account for each of us. Electronic record. Linked to bank account.

[Aloha]

The $10,000 purchase limit per year is problematic for many. At 9%, with the 3 month penalty, $675 return for the year. With the current inflation rate, sort of a wash, but better than most other choices. Raising the $10,000 limit would be awesome.

[Babubhat]

Qyld and Xyld generate ten percent. Bond limits too low to be material to me

[rustyp]

Qyld and Xyld generate ten percent. Bond limits too low to be material to me


Are those funds FDIC insured and guaranteed 10% rate of return ?

[dewilson58]

Qyld and Xyld generate ten percent. Bond limits too low to be material to me

Fake News!!!

Year-to-Date QYLD = (5.9%)
Year-to-Date XYLD = (1.1%)

NEGATIVE RETURNS.

:ohdear::ohdear:

[retiredguy123]

To clarify, the I bond interest rate changes every 6 months, and you must keep the bond for 5 years or forfeit 3 months of the interest. So, for example, assume that you buy a $10,000 I bond in January that pays 7 percent, and the interest rate stays the same for one year, and then you cash in the bond. Note that the interest is compounded semi-annually. You will receive about $10,534 for the bond, of which $534 is taxable income at your ordinary income tax rate. So, the actual interest rate you receive is about 5.34 percent before taxes because you forfeit 3 months of the interest. In order to receive the entire 7 percent first year interest rate, you would need to keep the bond for at least 5 years. The interest rate for years 2 through 5 is unknown because it changes every 6 months. Just doing the math.

[rustyp]

Qyld and Xyld generate ten percent. Bond limits too low to be material to me

To clarify, the I bond interest rate changes every 6 months, and you must keep the bond for 5 years or forfeit 3 months of the interest. So, for example, assume that you buy a $10,000 I bond in January that pays 7 percent, and the interest rate stays the same for one year, and then you cash in the bond. Note that the interest is compounded semi-annually. You will receive about $10,534 for the bond, of which $534 is taxable income at your ordinary income tax rate. So, the actual interest rate you receive is about 5.34 percent before taxes because you forfeit 3 months of the interest. In order to receive the entire 7 percent first year interest rate, you would need to keep the bond for at least 5 years. The interest rate for years 2 through 5 is unknown because it changes every 6 months. Just doing the math.

And that I consider a good deal. As others have pointed out it is a very small amount that is allowed to be invested. So I do it as part of a very multifaceted portfolio.

I consider this portion of my portfolio the dime hidden in the back of my wallet in case I ever needed to make an emergency phone call.

[irishwonone]

Think what would happen without an annual limitation......$11B would be a drop in a bucket.

Less debt to China.

:coolsmiley:
Exactly. There’s been some recent discussion about expanding those limits. Not holding my breath though.

[bragones]

Considering many households are couples and the $10k annual limit is per person, the investment amount for couples is $20k annually...a little better.

[rustyp]

Considering many households are couples and the $10k annual limit is per person, the investment amount for couples is $20k annually...a little better.

You can also gift each other a bond of 10K apiece - now up to $40K.
Then you can also buy $5K using your tax refund - now up to $45K is possible.

CAUTION - get an education on the limitations of the above two items some call the back door. However it is legal.

[Chi-Town]

Bought 3 max in 2001 and put them in a drawer. Never thought about buying more until this thread. Will buy the limit again. Thanks.

[Michael G.]

I'm also invested in a I-bond a year ago, but remember, CD's will be on the upswing again in 2022

[dewilson58]

I'm also invested in a I-bond a year ago, but remember, CD's will be on the upswing again in 2022

Not much of a swing, more like a bunt.

[Michael G.]

Not much of a swing, more like a bunt.

2022 isn't over with yet

[TNGary]

Anyone verified the back door concept? appreciate the post


You can also gift each other a bond of 10K apiece - now up to $40K.
Then you can also buy $5K using your tax refund - now up to $45K is possible.

CAUTION - get an education on the limitations of the above two items some call the back door. However it is legal.

[rustyp]

Anyone verified the back door concept? appreciate the post

https://www.youtube.com/watch?v=bSoZJJypSAQ

[Altavia]

Hmm, this guy thinks that if you have a trust, you can buy another $10,000 per year under the name of the trust.

Buy More I Bonds in a Revocable Living Trust (https://thefinancebuff.com/buy-more-i-bonds-treasury-direct-trust.html)

[Altavia]

https://www.youtube.com/watch?v=bSoZJJypSAQ

Very interesting. What happens to bonds not transferred if the purchaser dies before transferring the bonds?