I Bonds, anyone?

[Tiny]

TLDR;   

I'm wondering if anyone else is planning to buy I Bonds? I know the 'fixed rate' is 0% but the % for inflation is way higher than even my "high interest" account at Ally.   What would you use any future I Bond money for??  


In January 2021 I had an EE bond get so old it stopped accruing interest.     

I converted all my paper bonds to electronic bonds probably 20 years ago (maybe longer) and so have a Treasury Direct account.  I think I had some "fantasy" about buying bonds regularly and funding my retirement.   Yeah, didn't work out that way.  

Anyway, Treasury Direct stuck my payout from the bond into a non interest bearing account (possibly because the bank account I had attached to the TD account had been closed about 10 years ago).  To get at the $$ I had to get a new bank account connected which was an interesting set of steps and took nearly a month to accomplish. 

Since I was spending so much time on the Treasury Direct website - I got "bond fever" again and I decided to add a bit of money to the non-interest bearing account to make it round $500 and to buy a brand spanking new I Bond after May 1st.  
 
I might  move about 4K of my EF over to I Bonds - I'm a little EF heavy (as I hoarded some cash at the beginning of the pandemic - just in case)  and I letting the money sit for 1 year or the whole 5 years is do-able.    If I do this for 2021 - I will probably see if I can find 1500 more to make it a nice round 5K.    I'll be 61 (and most likely not working) in 5 years.  So maybe this wouldn't be a bad thing to do... 

[dannylion]

I have been putting the maximum allowed into I Bonds for several years.  I am retired and probably have too much exposure in equities and way too much in cash, so I've been moving new money into more conservative instruments, which includes I Bonds.  I have a particular fondness for Savings Bonds as my parents favored them as investments, and the bonds I inherited are earning what are now very good interest rates, so I'm hanging onto them until maturity.  I have no idea whether this is the best use of excess cash, but it's what I'm comfortable with and something I understand, so I'm happy staying with I Bonds.  

[susana1954]

I wouldn't put my EF into savings bonds.  You have to leave it in there a year before you can cash it in, and there is a 3-months interest penalty if you cash it in before 5 years.  That's not really liquid enough for an EF.

That said, I have about $2100 in I-bonds.  There is no particular strategy behind buying them.  They are just one more savings vehicle.  I do claim the interest every year on my income taxes so that it won't be one more thing that my kids will have to pay taxes on if I don't outlive my money.  

[giramomma]

Apr 23, 2021 17:20:28 GMT -5 susana1954 said:

That said, I have about $2100 in I-bonds.  There is no particular strategy behind buying them.  They are just one more savings vehicle.  I do claim the interest every year on my income taxes so that it won't be one more thing that my kids will have to pay taxes on if I don't outlive my money.  

Are one of your kids listed on the bonds as beneficiaries?

Mom's got way more than that. (Though, I don't know how much). They are all in her and dad's name. If she doesn't put my name on them (or someone else's name who might be dealing with the estate), a lawyer will need to be hired to get all of that straightened out.

[susana1954]

Apr 24, 2021 7:56:38 GMT -5 giramomma said:

Apr 23, 2021 17:20:28 GMT -5 susana1954 said:

That said, I have about $2100 in I-bonds.  There is no particular strategy behind buying them.  They are just one more savings vehicle.  I do claim the interest every year on my income taxes so that it won't be one more thing that my kids will have to pay taxes on if I don't outlive my money.  

Are one of your kids listed on the bonds as beneficiaries?

Mom's got way more than that. (Though, I don't know how much). They are all in her and dad's name. If she doesn't put my name on them (or someone else's name who might be dealing with the estate), a lawyer will need to be hired to get all of that straightened out.

Yes.  When I buy them, I buy two $25 ones and put each kid's name on one as POD.  I actually started buying these when DH was alive and healthy.  He was my beneficiary on pretty much everything so when I had a little extra, I'd buy these two bonds for my kids.  

That's why the amount is so paltry.  I still buy them the same way because most of my monthly savings are going into what you guys call "sinking funds" for a newer car at some point and house maintenance.

You would rather have no beneficiary than "someone else's name who might be dealing with the estate."  That someone else would own the bond with no requirement to share.  If your mother dies without a named beneficiary, they go to the estate.

[dannylion]

Apr 24, 2021 7:56:38 GMT -5 giramomma said:

Apr 23, 2021 17:20:28 GMT -5 susana1954 said:

That said, I have about $2100 in I-bonds.  There is no particular strategy behind buying them.  They are just one more savings vehicle.  I do claim the interest every year on my income taxes so that it won't be one more thing that my kids will have to pay taxes on if I don't outlive my money.  

Are one of your kids listed on the bonds as beneficiaries?

Mom's got way more than that. (Though, I don't know how much). They are all in her and dad's name. If she doesn't put my name on them (or someone else's name who might be dealing with the estate), a lawyer will need to be hired to get all of that straightened out.

Not necessarily.  If you are the only beneficiary of the estate, you will just need to fill out the forms you can find on the Treasury website and send the bonds (if they are physical bonds) along with death certificates and whatever document your state issues to executors and have the bonds transferred to your name.  If the bonds are digital, there are instructions on the Treasury website for transferring those, as well.  (The bonds I inherited were physical bonds, so that's all I have experience with).  Any bonds that have matured will be redeemed and the proceeds transferred into whatever bank account you specify.  You can elect to keep any bonds that have not yet matured, and they will be transferred into a digital Treasury account in your name, or you can choose to redeem them and take the proceeds.  You might want to review any tax consequences if tax has not been paid on the proceeds by your parents to determine the timing of redeeming the bonds.  

[countrygirl2]

I started buying them in 2003 or so?? With the fixed component and CPI those are earning very well. I have some earning over 5%, over 4% down to 2% or so even now. the last I bought was in 2010, but I have done well. I invested $60k and now they are worth $130k. I wish I had realized when they first came out, those first few years were the best earning ones, but the rest are ok too. I have not looked at buying more since they created Treasury Direct. I tried setting up an acct when they first set it up and just couldn't get it working. I suppose I need to try again, that was over 10 years ago.

We have some maturing in 2030 and then every so many years after that. I have thought of putting them in grand sons name, but hesitate, not knowing what money we might need the rest of our lives. Probably a mistake.

[minnesotapaintlady]

I'm looking into these for the first time this year.  I was never much interested in bonds before, but I'm hoping to retire in 7 years and would like a couple years of cash savings and at least going this route it would keep up with inflation.  However, I'm also trying to reduce the number of accounts I have so I'm torn between adding investments with Treasury Direct or just dumping more in VBTLX. 

[Tiny]

Treasury Direct isn't such a bad "account" to have. They don't spam you with lots of email (I think in 10 years the only email I got was the one that said my bond had reached the "end" and the money was deposited into the non-interest bearing account. )

I think there's a limit on how much you can invest at TD - $12K I think... not giving the limit too much thought because I won't be close.

I moved my "sinking funds" to Ally from a savings account (I should have done that years ago..) and now I'm thinking the "overage" from my EF that's been sitting in CDs needs to go someplace else as well. The odds of me needing that money in the CDs is next to nil - so maybe I should chase an interest rate with the money I'm going to hold for years anyway.

I'm kind of thinking of an Ibond "ladder" - 5K per year -- having some extra "cash" from 61 to 65 might be helpful for me - it's money I wouldn't have to take out of other investments in the years before I can take my pension. I probably should have looked at this sooner. ::sigh::

This "financial planning" for retirement is hard. there's so many things to consider.

[countrygirl2]

I have to double check but I don't think you can cash in I bonds for at least 5 years after purchase. Check that.

Out to plant my garden, later all.

[minnesotapaintlady]

Apr 27, 2021 8:53:26 GMT -5 countrygirl2 said:

I have to double check but I don't think you can cash in I bonds for at least 5 years after purchase. Check that.

Out to plant my garden, later all.

It's 1 year that they have to be held.  After 1 year and up to 5 you surrender 3 months of interest to cash them in.  After 5 years there is no interest penalty.

[countrygirl2]

Thanks, I couldn't remember for sure.

[Artemis Windsong]

Whew! I spent an hour opening a treasurydirect account for an I bond. I had a hard time finding the "buy" button. I signed in at least 4 times. It's done. I'm sure glad I decided to set up the account at home rather than the bank lobby!

H. is also interested. That's more interest then any other "safe" investment.

ETA:  I do need to check out the treasurydirect beneficiary option to make POD transfer smoother.

[countrygirl2]

I worked my butt off way back when trying to set one up, I can't remember now if I was ever successful. It's way to much work to get it going. 

The key to making money on the I's, is buy them when the fixed component is high, then you will always earn on them. Now if the rate goes up I will really be getting earnings on them again!

We have a CD maturing, its earning nothing, but its and IRA. I told hubs if we can lets just put it in a money market, I'm not sure if we can do that. We won't spend it and even if we did, just have to pay taxes.  I do hope the rates go up some, it sure would help us.

[Artemis Windsong]

With I bonds fixed at 0%, a person is betting on the variable component to go up. Most of us worked our rear ends off doing a financial plan only to have pennies on the dollar now.

[jerseygirl]

We started setting up I bond account but stopped. Only can buy $5000/year so decided to do something else . Too much work and asked a lot of questions, plus seems might be easy to lose track of bonds ‘in the cloud’
Jerseyguy bought an annuity that won’t decrease principal and based on 3 indexes will give about 80% of index increase. He’s happy no taxes and no decrease in principal with better upside than the ridiculous 0.01 % bank interest. Don’t foresee that he will need to use this and will just perk along till our kids inherit

[Artemis Windsong]

The limit is $10,000 electronic I bond. The account won't get lost in the "cloud".

[jerseygirl]

May 22, 2021 15:18:02 GMT -5 Artemis Windsong said:

The limit is $10,000 electronic I bond. The account won't get lost in the "cloud".

I didn’t literally mean lost in the cloud, I meant we (husband and myself) might keep poor records (or Alzheimer’s) and kids who will inherit wouldn’t even know existence of the bonds

[Rukh O'Rorke]

Apr 26, 2021 13:14:45 GMT -5 minnesotapaintlady said:

I'm looking into these for the first time this year.  I was never much interested in bonds before, but I'm hoping to retire in 7 years and would like a couple years of cash savings and at least going this route it would keep up with inflation.  However, I'm also trying to reduce the number of accounts I have so I'm torn between adding investments with Treasury Direct or just dumping more in VBTLX. 

I might join in this. But. I will need to follow you closely so please post blow-by-blow details so I can follow along. You know, without really knowing anything....

[Rukh O'Rorke]

so I found this:


A combination of a fixed rate that stays the same for the life of the bond and an inflation rate that is set twice a year. For bonds issued from May 2021 through October 2021, the combined rate is 3.54%. 

here:

www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm


that seems pretty good - over 3 and a half percent??

[Rukh O'Rorke]

WELL - apparently I am very easily influenced.

I opened up a treasury direct account, bought 500 on ibonds, and put in a recurrent 100 for every payday.  not a lot. not enough to add up quickly, but it's a start and I will think more about it as part of my "grand" plan.

it was super easy, so it was like I was just clicking around and suddenly I had an account.

[minnesotapaintlady]

May 22, 2021 18:03:29 GMT -5 Rukh O'Rorke said:

Apr 26, 2021 13:14:45 GMT -5 minnesotapaintlady said:

I'm looking into these for the first time this year.  I was never much interested in bonds before, but I'm hoping to retire in 7 years and would like a couple years of cash savings and at least going this route it would keep up with inflation.  However, I'm also trying to reduce the number of accounts I have so I'm torn between adding investments with Treasury Direct or just dumping more in VBTLX. 

I might join in this. But. I will need to follow you closely so please post blow-by-blow details so I can follow along. You know, without really knowing anything....

Well, I went all-in last week and put in a buy request for the 28th for 10K.  I figured I'd let it sit in the high yield checking until the very last minute.  Bonds bought on the last day of the month get the full month's interest same as if they were bought on the first day.  

[Rukh O'Rorke]

May 22, 2021 21:25:18 GMT -5 minnesotapaintlady said:

May 22, 2021 18:03:29 GMT -5 Rukh O'Rorke said:

I might join in this. But. I will need to follow you closely so please post blow-by-blow details so I can follow along. You know, without really knowing anything....

Well, I went all-in last week and put in a buy request for the 28th for 10K.  I figured I'd let it sit in the high yield checking until the very last minute.  Bonds bought on the last day of the month get the full month's interest same as if they were bought on the first day.  

BIG MONEY ROLL!


at my rate I’ll hit 10k in 3-4 years...well, I’ll think more about you example

[Artemis Windsong]

May 22, 2021 17:42:24 GMT -5 jerseygirl said:

May 22, 2021 15:18:02 GMT -5 Artemis Windsong said:

The limit is $10,000 electronic I bond. The account won't get lost in the "cloud".

I didn’t literally mean lost in the cloud, I meant we (husband and myself) might keep poor records (or Alzheimer’s) and kids who will inherit wouldn’t even know existence of the bonds

An effective method is a net worth statement listing assets/liabilities and where they are.  Updated the first of the year.  Some people update monthly.  My pen is so much smarter than I am.  So I don't get confused, I make notes on when/where I move money.  I know this is not recommended but I keep a list of passwords.

[minnesotapaintlady]

May 23, 2021 0:50:36 GMT -5 Rukh O'Rorke said:

May 22, 2021 21:25:18 GMT -5 minnesotapaintlady said:

Well, I went all-in last week and put in a buy request for the 28th for 10K.  I figured I'd let it sit in the high yield checking until the very last minute.  Bonds bought on the last day of the month get the full month's interest same as if they were bought on the first day.  

BIG MONEY ROLL!


at my rate I’ll hit 10k in 3-4 years...well, I’ll think more about you example [img src="https://i239.photobucket.com/albums/ff155/JiminiChristmas/ymamsmiles/smile.gif" src="//storage.proboards.com/forum/images/smiley/smiley.png" alt="" class="smile"]

I just wanted to get in on the 3.54%  My emergency fund was pretty fat so I felt comfortable locking up 10K of it for a year. 

[minnesotapaintlady]

May 22, 2021 17:42:24 GMT -5 jerseygirl said:

May 22, 2021 15:18:02 GMT -5 Artemis Windsong said:

The limit is $10,000 electronic I bond. The account won't get lost in the "cloud".

I didn’t literally mean lost in the cloud, I meant we (husband and myself) might keep poor records (or Alzheimer’s) and kids who will inherit wouldn’t even know existence of the bonds

I worry about this too.  Not just with I bonds, but I have money at Vanguard, Fidelity, Schwab, Discoverbank, the kid's 529 accounts... I think I need to be more diligent with updating my "If I die" book.  

[Tiny]

I've got a 5K CD of my overly fat Emergency fund coming due in June. I'm thinking I will buy 5K of I bonds with it in June.

I don't think interest rates on CDs are going to suddenly jump up - right now the "special 13 month CD" is at .10% (a 5year cd is at .45%). I don't want to chase CD rates (as I don't have enough to "spend" on it and I don't want to start a new banking relationship).

I definitely do not need this money in the next 12 months... so to I bonds it's going. I will "suffer" the loss of 3 months interest at some future date if I have to sell the bond(s) after 1 year (most likely not).

I'm looking around for "other loose change" that I have in various accounts to see I can scrap up some more money and I will buy more I bonds. 
(I've got checking accounts that require minimums and that over time I have $100 or $200 over the minumum which I 'skim off' periodically for example.) 

[tskeeter]

May 23, 2021 10:05:16 GMT -5 minnesotapaintlady said:

May 22, 2021 17:42:24 GMT -5 jerseygirl said:

I didn’t literally mean lost in the cloud, I meant we (husband and myself) might keep poor records (or Alzheimer’s) and kids who will inherit wouldn’t even know existence of the bonds

I worry about this too.  Not just with I bonds, but I have money at Vanguard, Fidelity, Schwab, Discoverbank, the kid's 529 accounts... I think I need to be more diligent with updating my "If I die" book.  

As part of our estate plan, we’ve given our trustees a listing of the locations of all of our assets, including account numbers, contact info, phone and website, etc.  That way they can locate the investment accounts, insurance policies, pensions, and everything else.  Update this information every couple of years to keep it relatively up to date.

[tskeeter]

May 23, 2021 10:05:16 GMT -5 minnesotapaintlady said:

May 22, 2021 17:42:24 GMT -5 jerseygirl said:

I didn’t literally mean lost in the cloud, I meant we (husband and myself) might keep poor records (or Alzheimer’s) and kids who will inherit wouldn’t even know existence of the bonds

I worry about this too.  Not just with I bonds, but I have money at Vanguard, Fidelity, Schwab, Discoverbank, the kid's 529 accounts... I think I need to be more diligent with updating my "If I die" book.  

As part of our estate plan, we’ve given our trustees a listing of the locations of all of our assets, including account numbers, contact info, phone and website, etc.  That way they can locate the investment accounts, insurance policies, safe deposit box, pensions, info on cars and everything else.  Update this information every couple of years to keep it relatively up to date.  During the first few updates, I added things I hadn’t thought of before.  Since then, updates are pretty easy.

[susana1954]

May 23, 2021 12:42:02 GMT -5 tskeeter said:

May 23, 2021 10:05:16 GMT -5 minnesotapaintlady said:

I worry about this too.  Not just with I bonds, but I have money at Vanguard, Fidelity, Schwab, Discoverbank, the kid's 529 accounts... I think I need to be more diligent with updating my "If I die" book.  

As part of our estate plan, we’ve given our trustees a listing of the locations of all of our assets, including account numbers, contact info, phone and website, etc.  That way they can locate the investment accounts, insurance policies, pensions, and everything else.  Update this information every couple of years to keep it relatively up to date.

I use Quicken so it has all the accounts listed.  If my son, who is the executor, isn't smart enough to look at the list of accounts to know where I have my money, then he needs to give back his CPA license. 

I have a list of passwords hidden on the computer, but they don't really need those after you die.  I learned after DH died that the creditors have a special department that will talk with you.