I Bonds, anyone?

[CCL]

Apr 23, 2022 12:03:02 GMT -5 Mardi Gras Audrey said:

Apr 22, 2022 22:37:24 GMT -5 jenpen said:

Rukh O'Rorke, a revocable living trust (RLT) is generally used as a way to pass down assets and avoid probate. You can move whatever assets (savings bonds, brokerage account, real estate, artwork,etc) you want into and out of it whenever you want. For things like real estate and financial accounts, if you want them to be held in the trust, you have to register them under the name of the trust, not your own name. Accounts registered that way are considered "entity accounts" in TreasuryDirect. It is still tied to the SSN of the trust grantor (eg, I am the grantor of the Jenpen RLT), and as MPL says, it is subject to the same purchasing limits as individual accounts. I first learned about using these for additional I bond purchases from some threads at bogleheads.

They are definitely not for everyone. But it made sense for me, because I have no spouse or kids or special circumstances, so I was able to borrow the NOLO book from the library and use their instructions for a basic individual trust. It cost me a few afternoons of reading, and an hour or 2 of typing and double checking the document.  My credit union offers free notary services, and I spent another 5 minutes getting that done.  If I made any errors, then I can revoke the trust at any time. If errors are found after I die, well, I really don't care. For people who do care and have more complicated circumstances, they probably want to get a lawyer involved, and that cost doesn't justify doing this solely for purchasing more I bonds.

Question about the limits for ibonds... if u buy $10k under the trust, can u also buy $10k as an individual? Both are using the same SSN so is the limit by SSN or by name? Can I buy $10k as Audrey and $10k as Audrey trust even though the both use the same SSN?

Then would you also have to file yearly tax returns for the trust? Or maybe that depends on how much income there is?

[nlt]

I’m not sure how to tag Minnesotapaintlady, but how did you buy carrots I bonds? Did you do it under your account as a gift, did you create him an account?  I see where you said minor custodial account, is that under opening an individual account ?  Thanks in advance, this thread has been immensely helpful!

[minnesotapaintlady]

Apr 25, 2022 20:55:30 GMT -5 nlt said:

I’m not sure how to tag Minnesotapaintlady, but how did you buy carrots I bonds? Did you do it under your account as a gift, did you create him an account?  I see where you said minor custodial account, is that under opening an individual account ?  Thanks in advance, this thread has been immensely helpful!

If you already have a TreasuryDirect account, when you log in there are tabs across the top.  Go into the "Manage Direct" tab and there is a link to "Establish A Minor Linked Account".  All you need is their name, SS# and birthdate.  You can use your current linked bank account to fund it. 

I made myself co-ownder on the bond I bought Carrot which gives me equal rights to the money even after he turns 18 if it's still in there (but it won't be). You can also make them the sole owner or put yourself as the beneficiary. Either way, when they turn 18 if there is money in the account it transitions to them.  

This is the cliff notes version of my original post that I wrote 3X.  For some reason it kept erring out and dumping it. 

[nlt]

Thanks, mpl!  I was not going it about it the right way on treasury direct. 

[Rukh O'Rorke]

ok - this is weird....

So today marks my 1 year foray into ibonds....so I have May bonds at the 1 year mark, and then some Nov bonds at the 6 month mark....both groups say the interest rate is "not available"

what does that mean? Is anyone else seeing that in your TD accounts?

[msventoux]

May 1, 2022 17:14:17 GMT -5 Rukh O'Rorke said:

ok - this is weird....

So today marks my 1 year foray into ibonds....so I have May bonds at the 1 year mark, and then some Nov bonds at the 6 month mark....both groups say the interest rate is "not available"

what does that mean? Is anyone else seeing that in your TD accounts?

I have I bonds going back to 2007 that I’ve automatically purchased every month. All of the bonds that are in six month increments from today show interest rate as not available. The bonds purchased between those six month increments have interest rates listed. I’ve never seen that before. But I don’t know that I’ve ever looked on a weekend where the month changed either. Presumably the rates will be updated tomorrow during business hours. 

[minnesotapaintlady]

It's not available because it's a Sunday and it's the government. They'll update with the new rate tomorrow. 

[minnesotapaintlady]

New composite rate is 9.62% as expected.  They kept the fixed rate at 0%

[susana1954]

It is interesting that bonds purchased on 11/1 or 5/1 (doesn't matter the year apparently) do not have their rate available.  I guess that's because they will receive the new rate since their purchase corresponds with the change?

[Rukh O'Rorke]

yep - still not available....

[minnesotapaintlady]

May 2, 2022 23:59:56 GMT -5 Rukh O'Rorke said:

yep - still not available....

Mine don't say that. Either way you know it's 9.62% as it was officially announced early morning yesterday.

[countrygirl2]

I likely should buy more, but I quit when the fixed component went to zero, that's why mine old ones have earned well, they always earn something because of that.

But considering nothing safe is paying anything, I likely need to do that. If we sell a property for sure will put some of that in this year and next.

[Rukh O'Rorke]

May 3, 2022 6:13:25 GMT -5 minnesotapaintlady said:

May 2, 2022 23:59:56 GMT -5 Rukh O'Rorke said:

yep - still not available....

Mine don't say that. Either way you know it's 9.62% as it was officially announced early morning yesterday.

I like to see it.

Finally, the 9.62% is showing....

I put in my final 3k for this year, then had about 4k roll into the 9.62%. So at least a little something getting in on the action. 

[minnesotapaintlady]

Good lord...

Just saw sales figures for I Bonds which showed that over $6,000,000,000 (that's six BILLION) in I Bonds were sold in just two months (12/21 and 1/22).

[Rukh O'Rorke]

May 11, 2022 13:22:51 GMT -5 minnesotapaintlady said:

Good lord...

Just saw sales figures for I Bonds which showed that over $6,000,000,000 (that's six BILLION) in I Bonds were sold in just two months (12/21 and 1/22).

and some of it is mine 

[Rukh O'Rorke]

adding - that I've wondered why we owe other countries money when we could just make more Ibonds available to our citizens....

[countrygirl2]

With that kind of interest being paid wouldn't surprise me if they limit people to even less they can buy. They have done it before

[seriousthistime]

Some pages back there was a discussion of TIPS as well.

With the limits on buying I bonds, I'm thinking of putting some money into a TIPS fund or TIPS ETF.  I've maxed out what I can put into I bonds this year and I still have a chunk of money sitting in a MM account earning basically nothing. I'm not confident enough about putting it into equities right now. 

From what I gather, the way TIPS funds work is this, and please correct me if I'm wrong.  Say you bought a share of the fund for $10.00.  That price can go up or down.  When interest rates are rising, as they are now, the share price will go down. When interest rates are dropping, the price of the fund share increases. So if you bought it for $10.00, 6 months ago, the share price could be $9.50 today.  But the fund's dividends (?) are tied to inflation now, which is high. So if you sell now, at $9.50, you will lose money compared to the price you paid (and there is no restriction on how long you have to own it) but you would have earned dividends in the meantime, so that could offset some of the amount you lost?  And, no surprise, it's best to buy low, sell high.  So is now a good time to buy, while interest rates are rising? 

Looking at FIPDX, the price is near its 52-week low.  But it seems the yield tied to the inflation rate is much lower than it is on I bonds. 

So it seems there are two moving parts to TIPS funds: share price which fluctuates up and down and could result in a gain or loss when you sell, and yield/dividends, which would never be negative. 

[Rukh O'Rorke]

May 14, 2022 18:33:12 GMT -5 seriousthistime said:

Some pages back there was a discussion of TIPS as well.

With the limits on buying I bonds, I'm thinking of putting some money into a TIPS fund or TIPS ETF.  I've maxed out what I can put into I bonds this year and I still have a chunk of money sitting in a MM account earning basically nothing. I'm not confident enough about putting it into equities right now. 

From what I gather, the way TIPS funds work is this, and please correct me if I'm wrong.  Say you bought a share of the fund for $10.00.  That price can go up or down.  When interest rates are rising, as they are now, the share price will go down. When interest rates are dropping, the price of the fund share increases. So if you bought it for $10.00, 6 months ago, the share price could be $9.50 today.  But the fund's dividends (?) are tied to inflation now, which is high. So if you sell now, at $9.50, you will lose money compared to the price you paid (and there is no restriction on how long you have to own it) but you would have earned dividends in the meantime, so that could offset some of the amount you lost?  And, no surprise, it's best to buy low, sell high.  So is now a good time to buy, while interest rates are rising? 

Looking at FIPDX, the price is near its 52-week low.  But it seems the yield tied to the inflation rate is much lower than it is on I bonds. 

So it seems there are two moving parts to TIPS funds: share price which fluctuates up and down and could result in a gain or loss when you sell, and yield/dividends, which would never be negative. 

I posted some info in the TIPS thread with a link to an article. tl/dr TIPS may not hedge against inflation short term, although they may work long term.

[Rukh O'Rorke]

Back to Ibonds....

so I'm up to nearly 100/month in ibond interest  with the stock market situation, I have to take solace where I can.

I did notice that the 3 months interest rate penalty for cashing out early comes at the begining, so no interest first 3 months of holding, and then on 4th month you don't get it yet. When does that interest come in? Not till you hold it for the whole 5 years? Then who knows what the rate may be. 

Was also wondering what the maximum ibond holding is. So if you can buy 10k/yr, and they earn interest for 30 years then stop, I assume youd need to cash out year 1's bond at 30 years and then put the principal back in as year 31 purchase, and keep any interest - so the maxium puchase would be 300k - unless you were willing to let year one languish with no interest, which, no one would intentionally.

[Tiny]

Jun 1, 2022 13:23:40 GMT -5 Rukh O'Rorke said:

Back to Ibonds....

so I'm up to nearly 100/month in ibond interest  with the stock market situation, I have to take solace where I can.

I did notice that the 3 months interest rate penalty for cashing out early comes at the begining, so no interest first 3 months of holding, and then on 4th month you don't get it yet. When does that interest come in? Not till you hold it for the whole 5 years? Then who knows what the rate may be. 

Was also wondering what the maximum ibond holding is. So if you can buy 10k/yr, and they earn interest for 30 years then stop, I assume youd need to cash out year 1's bond at 30 years and then put the principal back in as year 31 purchase, and keep any interest - so the maxium puchase would be 300k - unless you were willing to let year one languish with no interest, which, no one would intentionally.

The Ibonds I bought in June 2021 have interest in the total value. You have to drill down into your account to see the value with interest. At the highest level at TD - it sez I have 20,200.00 in IBond value. But that's not true - I have 1400.00 in Ibonds from 2006 thru 2008. They have way more value than 1400.00 I have to drill down into my IBond holdings to see the value of the individual bonds to see how much each one is worth today.  the other 18800 is "new" Ibond money from 2021 and 2022.      I can't remember what the actual total value is.
 
The maximum for ibond holding - might be as high as 15,000.00 per person (10K plus 5K from tax refund). The 300K is based on 10K per year per person.


I kind of wish I hadn't stopped my automatic monthly purchase of a $50 I-bond back in 2008.   The original plan was to increase the monthly purchase to $100 a month - and then increase it every year by $100 a month.... until ?   I was trying to start that "retirement ladder" of I-bonds that would be available to me in my 60's and 70's.    the Great Recession made me stop the purchase (out of fear of job loss) and then I never re-started the automatic purchase.      It's OK... I had better places to put that extra money - I was offered an HDHP plus HSA at work,  I was able to make "catch up" contributions to my 401K and Roth...   all things that sucked up any "extra money" I could have allocated to IBonds. And those things were better places to put my money anyway.   Ibonds are the "last thing" to buy when planning for retirement for me.   

[Rukh O'Rorke]

Jun 1, 2022 13:35:47 GMT -5 Tiny said:

Jun 1, 2022 13:23:40 GMT -5 Rukh O'Rorke said:

Back to Ibonds....

so I'm up to nearly 100/month in ibond interest  with the stock market situation, I have to take solace where I can.

I did notice that the 3 months interest rate penalty for cashing out early comes at the begining, so no interest first 3 months of holding, and then on 4th month you don't get it yet. When does that interest come in? Not till you hold it for the whole 5 years? Then who knows what the rate may be. 

Was also wondering what the maximum ibond holding is. So if you can buy 10k/yr, and they earn interest for 30 years then stop, I assume youd need to cash out year 1's bond at 30 years and then put the principal back in as year 31 purchase, and keep any interest - so the maxium puchase would be 300k - unless you were willing to let year one languish with no interest, which, no one would intentionally.

The Ibonds I bought in June 2021 have interest in the total value. You have to drill down into your account to see the value with interest. At the highest level at TD - it sez I have 20,200.00 in IBond value. But that's not true - I have 1400.00 in Ibonds from 2006 thru 2008. They have way more value than 1400.00 I have to drill down into my IBond holdings to see the value of the individual bonds to see how much each one is worth today.  the other 18800 is "new" Ibond money from 2021 and 2022.      I can't remember what the actual total value is.
 
The maximum for ibond holding - might be as high as 15,000.00 per person (10K plus 5K from tax refund). The 300K is based on 10K per year per person.


I kind of wish I hadn't stopped my automatic monthly purchase of a $50 I-bond back in 2008.   The original plan was to increase the monthly purchase to $100 a month - and then increase it every year by $100 a month.... until ?   I was trying to start that "retirement ladder" of I-bonds that would be available to me in my 60's and 70's.    the Great Recession made me stop the purchase (out of fear of job loss) and then I never re-started the automatic purchase.      It's OK... I had better places to put that extra money - I was offered an HDHP plus HSA at work,  I was able to make "catch up" contributions to my 401K and Roth...   all things that sucked up any "extra money" I could have allocated to IBonds. And those things were better places to put my money anyway.   Ibonds are the "last thing" to buy when planning for retirement for me.   

it's hard when there are all kinds of competing priorities for your savings and limited funds to push into them.

[azucena]

Thanks Tiny.  I had gone in a few days ago to check on the Ibonds that I bought in Dec and could only see the 10k balance.  I didn't know to click thru several times to see that the true balance is 10,176.  This prompted me to text DH to ask if he's okay plunking down another $10k each for 2022.

[minnesotapaintlady]

Jun 1, 2022 13:23:40 GMT -5 Rukh O'Rorke said:

Back to Ibonds....

so I'm up to nearly 100/month in ibond interest  with the stock market situation, I have to take solace where I can.

I did notice that the 3 months interest rate penalty for cashing out early comes at the begining, so no interest first 3 months of holding, and then on 4th month you don't get it yet. When does that interest come in? Not till you hold it for the whole 5 years? Then who knows what the rate may be. 

Was also wondering what the maximum ibond holding is. So if you can buy 10k/yr, and they earn interest for 30 years then stop, I assume youd need to cash out year 1's bond at 30 years and then put the principal back in as year 31 purchase, and keep any interest - so the maxium puchase would be 300k - unless you were willing to let year one languish with no interest, which, no one would intentionally.

The most recent 3 months of interest is excluded from the bond until you hit the 5 year mark, not the first 3 months interest, so it will keep shifting.

[Rukh O'Rorke]

Jun 1, 2022 14:23:38 GMT -5 minnesotapaintlady said:

Jun 1, 2022 13:23:40 GMT -5 Rukh O'Rorke said:

Back to Ibonds....

so I'm up to nearly 100/month in ibond interest  with the stock market situation, I have to take solace where I can.

I did notice that the 3 months interest rate penalty for cashing out early comes at the begining, so no interest first 3 months of holding, and then on 4th month you don't get it yet. When does that interest come in? Not till you hold it for the whole 5 years? Then who knows what the rate may be. 

Was also wondering what the maximum ibond holding is. So if you can buy 10k/yr, and they earn interest for 30 years then stop, I assume youd need to cash out year 1's bond at 30 years and then put the principal back in as year 31 purchase, and keep any interest - so the maxium puchase would be 300k - unless you were willing to let year one languish with no interest, which, no one would intentionally.

The most recent 3 months of interest is excluded from the bond until you hit the 5 year mark, not the first 3 months interest, so it will keep shifting.

got it, that makes sense, but still not great news if the interest rates fall, and then that 3 months of interest isn't compounding either......

[azucena]

I think someone posted this ibond calculator earlier in the thread but I've found it useful so I'll post it again 

eyebonds.info/ibonds/home10000.html

I put in another $10k each for DH and myself yesterday.  Moved it from savings earning 0.05%.

[countrygirl2]

There is a bond calculator, you can load your bonds each month and see the value. They used to have it automatic, load bonds once and just update. Now they want to charge for that so I just reload in the calulator, I have 75 bonds.

[minnesotapaintlady]

Jun 14, 2022 16:04:14 GMT -5 countrygirl2 said:

There is a bond calculator, you can load your bonds each month and see the value. They used to have it automatic, load bonds once and just update. Now they want to charge for that so I just reload in the calulator, I have 75 bonds.

You don't have to pay anything.  After you enter your bonds there is a "save inventory" button.  It saves it as an HTML link. When you click on the link it doesn't give you a current value just the one that you saved it as, but if you click on the "Return to Calculator" button on that page it will reload it into the TD calculator and recalculate the new value then you can re-save that link.  I put all my bonds in there, even my electronic ones.  That way I never have to log in to check their value.  I just go in once a month and update. 

Here's the instructions on how to do it.  If you're in the calculator and click the "save inventory" button it will take you to the same instructions.


treasurydirect.gov/indiv/help/bc/bc_savings_help.htm

[countrygirl2]

I had not tried it for a long time because it no longer worked. It all looks like the same pages. I always saved the calculated bonds so I pulled one up and reloaded and this time it updated.

Thanks, I had quit trying it because it would say invalid. 

Not sure what is different but it works for me now!

I have one $1000 bond earning, 11.09% wow, quite a few earning 10.67%, these are the best investment I made! I could kick myself for not investing a lot more way back then. My year to date interest is $5,182.30.

These are sure going to cost the government/taxpayers.

[susana1954]

Jun 15, 2022 8:23:01 GMT -5 countrygirl2 said:

I had not tried it for a long time because it no longer worked. It all looks like the same pages. I always saved the calculated bonds so I pulled one up and reloaded and this time it updated.

Thanks, I had quit trying it because it would say invalid. 

Not sure what is different but it works for me now!

I have one $1000 bond earning, 11.09% wow, quite a few earning 10.67%, these are the best investment I made! I could kick myself for not investing a lot more way back then. My year to date interest is $5,182.30.

These are sure going to cost the government/taxpayers.

Not really.  This isn't the usual amount of interest that these pay so there's that.  I imagine that a lot of people don't hold them the five years that avoids the 3 months of forfeited interest.  You are eventually taxed on the federal level on the interest you earn, and in your case it is going to be a whopping tax bill for someone.  In my case, I would have to be careful not to trigger for more of my SS to become taxable plus the possibility of IRMAA charges.

So it's not as expensive as you may think for the government/taxpayer.  The government is going to borrow money from somewhere.