I Bonds, anyone?

[Rukh O'Rorke]

what is everyone's thoughts for ibonds in 2023?

where do you all fancy ibond rates going? other savings options?


word on the street is fed is going to raise the rate .25%....so alternate savings could become more attractive....

And unlike 21&22, money I put in in 2023 could likely end up with the 3 month interest penalty, so with the lower ibond rates this year, I might be more cautious....

[plugginaway22]

I did not end up buying any more I bonds in 2022 after buying the 20k in October 2021. We have almost 70K sitting in the CapOne360 Perf savings earning 3.3%. That earned me $180 just in the month of December. But this is money we may need over the next 2 years so want easy access with something earned. 

I am too lazy to do the math on earnings with I bonds if you lose the 3 months interest.

[minnesotapaintlady]

Jan 18, 2023 14:24:03 GMT -5 plugginaway22 said:

I am too lazy to do the math on earnings with I bonds if you lose the 3 months interest.

Well, Treasury Direct does help in that it only shows the redeemable amount with the most recent 3 months pulled out already. 

[minnesotapaintlady]

I don't have enough money to max I bonds this year.    I'll probably put some in from my tax refund, but that might be it.  It sucks that my 401K is where I least want/need to put money, but the place that makes the most sense to do so!

[plugginaway22]

Thanks, I did NOT realize that! Always looked at it like that was the total interest earned to date.

[Tiny]

Jan 18, 2023 13:32:42 GMT -5 Rukh O'Rorke said:

what is everyone's thoughts for ibonds in 2023?

where do you all fancy ibond rates going? other savings options? 

I don't have any money to be buying I-Bonds. 2023 went off the rails pretty quick for me.

I will review I-Bonds again in April - maybe I will have some $$ by then (buy in April and get the fixed .4% rate for the life of the bond(s) - and see what the going thought is for the new May rates. )

I'm kind of stuck on the side lines.

If I had 10K I didn't "need" for something else - I would have bought 5K in I-Bonds already,  I would would put the other 5K in a T-Bill with a maturity date in April  2023 and I would then buy 5K more I bonds in May.     Just to be complicated.      But, I don't have 10K or even 1K at this point.  

It would be nice if I could get a total of 50K into I-bonds... so I need to do 10K for 3 years.   but that's pie in the sky. 

[Rukh O'Rorke]

Jan 18, 2023 21:50:06 GMT -5 Tiny said:

Jan 18, 2023 13:32:42 GMT -5 Rukh O'Rorke said:

what is everyone's thoughts for ibonds in 2023?

where do you all fancy ibond rates going? other savings options? 

I don't have any money to be buying I-Bonds. 2023 went off the rails pretty quick for me.

Me too, and lot of people I know......




hope it improves in feb!!

[justme]

Jan 18, 2023 21:50:06 GMT -5 Tiny said:

Jan 18, 2023 13:32:42 GMT -5 Rukh O'Rorke said:

what is everyone's thoughts for ibonds in 2023?

where do you all fancy ibond rates going? other savings options? 

I don't have any money to be buying I-Bonds. 2023 went off the rails pretty quick for me.

I will review I-Bonds again in April - maybe I will have some $$ by then (buy in April and get the fixed .4% rate for the life of the bond(s) - and see what the going thought is for the new May rates. )

I'm kind of stuck on the side lines.

If I had 10K I didn't "need" for something else - I would have bought 5K in I-Bonds already,  I would would put the other 5K in a T-Bill with a maturity date in April  2023 and I would then buy 5K more I bonds in May.     Just to be complicated.      But, I don't have 10K or even 1K at this point.  

It would be nice if I could get a total of 50K into I-bonds... so I need to do 10K for 3 years.   but that's pie in the sky. 

I bonds minimum is $25. Saw that after I was like sure let's throw $1000 in there.

[countrygirl2]

You need to buy to hold long term when the fixed component is up. I did years ago and quit when it dropped off. Mine will be about $150k in May.

Got my year end statement for Walmart stock it's $31k now. I bought something like $1200 worth many years ago and let the dividends and int reinvest went from 60 shares to 158 or around that. If they drop I really should add some more to it.

We had to cash 4 tiny EE bonds this year about $400 and some dollars. All the rest are I's, not even sure when the next ones mature, maybe 2029, a bunch in 2030's. I intend to hold them, need to get sons name on all of them not just part as beneficiary. Hubs and I are on a bunch, bought quite a few in my and sons name. We are on them as "or".

[MarionTh230]

Jan 22, 2023 22:28:09 GMT -5 countrygirl2 said:

You need to buy to hold long term when the fixed component is up. I did years ago and quit when it dropped off. Mine will be about $150k in May.

Got my year end statement for Walmart stock it's $31k now. I bought something like $1200 worth many years ago and let the dividends and int reinvest went from 60 shares to 158 or around that. If they drop I really should add some more to it.

We had to cash 4 tiny EE bonds this year about $400 and some dollars. All the rest are I's, not even sure when the next ones mature, maybe 2029, a bunch in 2030's. I intend to hold them, need to get sons name on all of them not just part as beneficiary. Hubs and I are on a bunch, bought quite a few in my and sons name. We are on them as "or".

Yes.  Anytime the fixed component is non-zero, I increase my purchases.

[MarionTh230]

Jan 18, 2023 13:32:42 GMT -5 Rukh O'Rorke said:

what is everyone's thoughts for ibonds in 2023?

where do you all fancy ibond rates going? other savings options?


word on the street is fed is going to raise the rate .25%....so alternate savings could become more attractive....

And unlike 21&22, money I put in in 2023 could likely end up with the 3 month interest penalty, so with the lower ibond rates this year, I might be more cautious....

My thoughts are to continue to do the same as I have been.  But, to be fair, I don't purchase I-bonds to chase yield or returns.  Everything I purchase in Treasury Direct is part of my catastrophe fund.  I live in hurricane country.  If it all goes sideways, I want to be able to access large amounts of cash relatively quickly.  Which means when I say catastrophe I mean it.  This is not part of my emergency fund, or my retirement picture, or my long term after-tax investments.  It is literally a pot of money I let sit there until the (inevitable) storm hits.

This means a few things for me.  One being, I purchase I-bonds every pay day.  This is actually how I started because my employer had a buy-a-bond-via-direct-deposit-type thing for every paycheck.  The vast majority of my TD holdings are I-bonds with a much smaller percentage in T-bills, 2 year notes, and 5 year TIPS.

I'm careful with the bills, notes, and TIPS to ladder them so at any given time I have a certain amount of liquidity coming due.  Because, again, my purpose is different than most others here.  For I-bonds, at this point I've been buying so long that the vast majority are more than 5 years old (cash out at any time) and a lot of the remaining are more than 1 year old (avoid the interest penalty for redemption).  more than 5 years old (avoid the interest penalty for redemption) and a lot of the remaining are more than 1 year old (cash out at any time). Not that I would care about any of the interest penalties if the s*&t hit fan bad enough for me to want to liquidate them anyways.

As part of my end of 2022/beginning of 2023 I should actually calculate the percentages of 5 years or more/less than 5 year more than 1 year/less than 1 year dollar amounts.  That seems like it would be an interesting thing to track.  But, I digress.

My end game is to basically hold cash 'safe enough'.  I use TD because I am willing to give up some amount of liquidity in return for more yield than a standard cash savings account.  Since I do not count any of this as my retirement plan, I am really in a stay-the-course sort of mindset at the moment.  With the fixed rate at non-zero, I will probably increase my purchase amount, but nothing too drastic. 

If I were chasing yield/returns and adding these dollars as part of my overall investment strategy I may think of things differently.  


*edited to correct typo.  I had it right in my head, but typed it backwards.  Hopefully nobody was led astray by my mistake.

[countrygirl2]

Yes, I have these bonds as kind of an end run account if everything else failed, which I don't expect to happen. But it's nice to have some money back that keeps earning for that "just in case time".

[MarionTh230]

I wandered back to this thread because as part of my end of the month stuff, I went ahead and did the analysis on my I-bonds.  11% of my I-bonds are less than 1 year old.  33% of my I-bonds are more than 1 year old, but less than 5 years old.  56% of my I-bonds are 5 years or older.  I-bonds account for 78% of my Treasury Direct holdings.  I think this suits my goal in terms of having a certain amount of liquidity.  I'm glad I did the exercise.

[minnesotapaintlady]

I bought $1000 more in I bonds with my tax refund.  I really, really wanted to go all-in with the 5K again, but alas, I think that will be it for me for the year.  I really can't justify doing anything above shoveling as much as I can into my 401K...which sucks.

[seriousthistime]

An article in the NY Times today talks about I bonds, and how other savings vehicles might better serve your needs.

Not that I bonds aren't good... it just depends on what you want and need to do with your money. 

link

[Rukh O'Rorke]

Feb 14, 2023 9:18:51 GMT -5 minnesotapaintlady said:

I bought $1000 more in I bonds with my tax refund.  I really, really wanted to go all-in with the 5K again, but alas, I think that will be it for me for the year.  I really can't justify doing anything above shoveling as much as I can into my 401K...which sucks.

I've had to dig pretty deep into my coffers to cover a lot of EOY spending and medical stuff for both persons and pets.

No ibonding for me at the moment....

[seriousthistime]

Any guesses as to whether there will be a fixed component on the I bonds issued May 1 or after?  

[minnesotapaintlady]

Feb 17, 2023 13:15:11 GMT -5 seriousthistime said:

Any guesses as to whether there will be a fixed component on the I bonds issued May 1 or after?  

While the variable component is pretty straightforward, I think how the fixed rate is calculated for I bonds might be considered one of life's greatest mysteries.    

[minnesotapaintlady]

16K more of my bonds have transitioned out of the 9.62% rate starting in March so I'm down to $10,500 making that.  It was fun while it lasted.

[Tiny]

But that 16K is still earning more than other "secure/cash" type investments for another 6 months.

I got on the I-Bond train when the interest rate went to 3.45% (or something like that)   It's been a pretty good run and it looks like it will go a little bit more. 

[minnesotapaintlady]

Oh, I'm not complaining, I'm up to $2600 interest on funds that would have made peanuts in the bank account.  By August it will be enough to pay Carrot's 8th grade tuition.  Not too shabby.

[azucena]

I have ibonds purchased in 12/21, 6/22, and 8/22. I'm up $3312. Thanks YM!

I have a big bonus coming of which I'll save 30% of the net. I've also pulled back some cash from an old bond that wasn't earning much any more.

I want to buy more ibonds earning 6.89%, right? And then remainder goes into Capitol One CD earning 5% for 11 months. Second guessing myself even though I can do the math, likely because it's so much cash.

[Tiny]

I want to buy more ibonds earning 6.89%, right?

ibonds you purchase thru the end of April will earn 6.89% for 6 months. They also have a fixed rate of .4% (which is included in the 6.89%) which they will hold for their lifetime.


I don't know what the prediction for the May announcement of the fixed rate and variable rate will be.   

To buy or not buy - also depends on your "purpose" for the money you are using to buy ibonds.   

I'm in FOMO mode.... the interest rate is very attractive but I don't have $$ that I can tie up for 12 or more likely 18 months (when perhaps interest rates will have dropped). 
CD rates are attractive   (as are T-Bills and T-notes you can buy via Treasury direct).   

In my case FOMO is clouding my judgement and making it difficult to give good advice.   

If the money is to be "stored" for a short term - I don't think it really matters much which way you go.    


 

[azucena]

I need to leave $25k in liquid savings to keep free checking and savings accts at usbank, so that's my main emergency fund.

I have ibonds that are over a year old that I could cash in as next emergency fund and take the 3 month interest penalty.

These additional funds that I need to stash are for extensive emergency fund (I've taken unpaid FLMA 5 times for DH's chronic health issues and once for my depression), so I'm more risk averse than most.

Plus funds for DD14s college cashflow. Good short term return for low risk for that goal.

I think I'm willing to bet that ibond composite rate will be >5% capitol one.

[Rukh O'Rorke]

Mar 1, 2023 10:01:31 GMT -5 minnesotapaintlady said:

16K more of my bonds have transitioned out of the 9.62% rate starting in March so I'm down to $10,500 making that.  It was fun while it lasted.

I have almost nothing left at the 9% level.......and finally this month my total interest is less than last month


C'est la guere!

[jenpen]

Feeling a little upset with myself. I did a full $25k purchase of I-bonds in February (after figuring I owed ~800 in fed tax, I paid IRS online just enough to get 5k back in paper bonds, then purchased 10k in my personal treasurydirect account and 10k in my trust account). I figured it was worth grabbing the current >0% fixed rate, but totally ignored the fact that the fixed rate could go up even more after May 1. Going to be really ticked off if it does and I can't take advantage, lol!

[seriousthistime]

I bought $10K in January, and also paid the IRS enough to buy $5K in paper bonds with my refund.  I won't be able to complete my taxes until April 1 or later, and I don't know whether my return/refund will be processed before May 1.  So who knows how much of that rate will be fixed, and if so whether it will be higher than 0.4%.  But I can't worry about it.  It will be what it will be.  Beyond my control. 

Last fall I was talking about converting my paper bonds to electronic format. I completed the manifest, sent them in to Treasury Direct, and got an email from them saying it was received but would take a while before they would show up in my account.  And they were not kidding.  I sent them in in early December.  They have not shown up in my account yet. 

[Tiny]

They have not shown up in my account yet.

When I converted my paper bonds over a decade ago - the converted bonds appeared in a second "account" within my main account.


All of my bonds that were purchased on line show up on the main page when I log in. All of my converted bonds have a second account.

At the top of the screen (next to the Welcome to your account heading) it shows that I have two "accounts" I renamed my main one - so I don't know what the default is. I also renamed my second one so I don't know what the default is.

If I want to see my "converted" bonds - I have to click on the second "account" link and it takes me the screens that ONLY show me my converted bonds.

I remember when I did the conversion that I got NO information - no message saying it was done and how to access my converted bonds. I remember getting frustrated with the process (so much time had gone by) and I was wilfing around the TD website trying to figure out how to contact them and ask about it... when I noticed the second account listed on the screen.   Because it appeared as part of the "heading" on the screen that "didn't do anything when I had only one account"  - my eyes/brain were trained to ignore it.  

[seriousthistime]

Thanks Tiny.  

When I log in, I land on "Welcome to Your Account Summary [my first name]"

There is no indication of a second account on that page. 

So I click on the Manage Direct tab > Manage my Conversions > Access my Conversion Linked Account.

That takes me to an Account Summary for My Converted Bonds, which does show a second account number, but it's not a hyperlink. If I click on that account number, nothing happens.  So it seems like they have not converted the bonds from paper to electronic form, but they have established an account number where they will go when they finally convert them. 

[Rukh O'Rorke]

Mar 3, 2023 0:01:16 GMT -5 jenpen said:

Feeling a little upset with myself. I did a full $25k purchase of I-bonds in February (after figuring I owed ~800 in fed tax, I paid IRS online just enough to get 5k back in paper bonds, then purchased 10k in my personal treasurydirect account and 10k in my trust account). I figured it was worth grabbing the current >0% fixed rate, but totally ignored the fact that the fixed rate could go up even more after May 1. Going to be really ticked off if it does and I can't take advantage, lol!

oh no! I also hadn't thought of that!

I got an unexpected 3k rebate on my escrow account and just put in an order for 2500 Ibonds, wondering if I should cancel and wait till May? Not too far away - but worried what will happen to that money, LOL! if I don't get it out of checking  .