[curtmcgee]

Anyone have any Pro's or Con's on the Federal Government's I-Bonds.

[Badger 2006]

Originally Posted by curtmcgee

Anyone have any Pro's or Con's on the Federal Government's I-Bonds.

Details;
~9.62% Compounds semi annually/ rate adjusts every 6 months based on Consumer Price index
~30 year maturity / must hold for 1 year / years 2 to 5 three months interest penalty to redeem.
~$10,000 purchase max per year

If these parameters fit your investment needs it could be one alternative to other more risky options.

[retiredguy123]

Originally Posted by curtmcgee

Anyone have any Pro's or Con's on the Federal Government's I-Bonds.

For me, the cons are that you can only invest $10K per year, but there is a gifting loophole that can increase that amount. Also, you can only buy them directly from the Government with a U.S. Treasury account. Too much trouble for me to bother with, but, for some, it is a good deal. Note that the interest rate is somewhat deceiving because the only way to get the full rate is to keep the bond for 5 years.

[REDCART]

Originally Posted by retiredguy123

For me, the cons are that you can only invest $10K per year, but there is a gifting loophole that can increase that amount...

There was a similar thread on TOTV that also mentioned the gift loophole. However, according to the Treasury Direct web site, the gifted I bond must be registered in the SSN of the recipient, which allows them to enforce the $10K annual maximum. I copied this from their web site.

How much in I bonds can I buy as gifts?

The purchase amount of a gift bond counts toward the annual limit of the recipient, not the giver. So, in a calendar year, you can buy up to $10,000 in electronic bonds and up to $5,000 in paper bonds for each person you buy for.

There may be an exception in death situations where an individual purchased $10K I bonds for themself and then inherited I bonds. Is that the loophole that you had in mind, or is there another that I’ve missed?

[Caymus]

Originally Posted by REDCART

There was a similar thread on TOTV that also mentioned the gift loophole. However, according to the Treasury Direct web site, the gifted I bond must be registered in the SSN of the recipient, which allows them to enforce the $10K annual maximum. I copied this from their web site.

How much in I bonds can I buy as gifts?

The purchase amount of a gift bond counts toward the annual limit of the recipient, not the giver. So, in a calendar year, you can buy up to $10,000 in electronic bonds and up to $5,000 in paper bonds for each person you buy for.

There may be an exception in death situations where an individual purchased $10K I bonds for themself and then inherited I bonds. Is that the loophole that you had in mind, or is there another that I’ve missed?

Another inconvenient method, you can also invest up to $5,000 of a tax refund.

[Chi-Town]

Interest is tax deferred. 10,000 for you, 10 000 for your spouse.
Can purchase on line.

[NY2TV]

Originally Posted by retiredguy123

For me, the cons are that you can only invest $10K per year, but there is a gifting loophole that can increase that amount. Also, you can only buy them directly from the Government with a U.S. Treasury account. Too much trouble for me to bother with, but, for some, it is a good deal. Note that the interest rate is somewhat deceiving because the only way to get the full rate is to keep the bond for 5 years.

If you cash them in before 5 years you only lose the last 3 months interest. Still a much higher yield than any savings account ir CD around. I don't see any cons...

[BlueStarAirlines]

Everyone has summarized the Pros very well, so nothing additional to add.

In addition to the cons, there are just a few more negatives:

-Must use the Treasury website, which is less than user friendly.
-Must use the Treasury website, so must ensure your records reflect this purchase as it won't be with your brokerage account if you pass.

Personally, I think the pro's far outweigh the negatives.

[Glorantha]

You can also gift them to grandchildren for a college fund. This saves on interest expense.
“The interest earned on series EE and Series I bonds can be used tax-free for college if the following conditions are met: The funds are used for qualified educational expenses for parent or dependent child. These include tuition and fees for courses that count toward a degree or certificate program.”

[Travelhunter123]

Originally Posted by curtmcgee

Anyone have any Pro's or Con's on the Federal Government's I-Bonds.

In addition to the 10k allowance for each spouse
- 10k allowance for Revocable Trusts
-10k allowance for a business filing

[msilagy]

I bought an I Bond this week. I thought the Federal Reserve website to register was straightforward. Easy to do. It's only $10k but what the heck better than anything else today.

[daveczo]

Originally Posted by Chi-Town

Interest is tax deferred. 10,000 for you, 10 000 for your spouse.
Can purchase on line.

If you have a family trust you can do an additional $10,000.

[Redsmom]

Originally Posted by daveczo

If you have a family trust you can do an additional $10,000.

Do you have to get an ID number to get an I bond in the name of a family trust? If not what ID number would be appropriate?

[Blueblaze]

Originally Posted by curtmcgee

Anyone have any Pro's or Con's on the Federal Government's I-Bonds.

If the only money I was worried about losing to inflation was $10,000, I think that instead of lending it to the same government that stole the rest of my life savings, I'd try to get something worthwhile for my last dime and blow it on wine women and song.

[Romad]

You can actually buy $15,000 per year per person by making sure you have at least a $5000 tax refund per person. Unfortunately, the ones purchased with a tax refund will be in paper.
The con is that you need to make sure family members know that you have them as well as the Treasury Direct account. Other than that, they are a safe investment these days. I wish they would raise the limit.