countrygirl2
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Post by countrygirl2 on Nov 1, 2023 7:26:26 GMT -5
You can compute and pay the interest on the I bonds earned annually. In retrospect, I wish I had done that and did not. So now when cashed in we are going to have a chunk. Thankfully, they are laddered so only so many a year will mature. The year they mature the tax on the interest has to be paid whether you cash them in or not is what I've read. Don't know if that has changed or not. But some of ours are in my name and sons, in hubs name and sons so depending on our circumstances they may just go to him. They are designated as son or mom as the owner.
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countrygirl2
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Post by countrygirl2 on Nov 21, 2023 21:33:56 GMT -5
That should be pay the taxes annually on I bonds in the paragraph above.
I just pulled mine up and projected them out through 5/2024.
I have interest rates as follows, 3.94, 4.96, 5.98, 7.00, 5.16,5.06, 7.41% yahoo! So I'm doing ok, the really big ones are when they first came out.
2 at 3.94 14 at 4.96 3 at 5.16 10 at 5.98 6 at 5.06 8 at 7.0 15 at 7.41 12 that had no % printd for that mont Those were all purchased 11/2005 So I am quite happy with my earnings. So will be $159,794, but less that I was earning.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Nov 22, 2023 14:52:44 GMT -5
But your total would be a lot less if you paid taxes annually and the rate would have been high as your husband was a high earner.
No one ever wants to pay taxes but the important thing to do is to be strategic about it when you can.
With ibonds a person should determine annually if their rate will be lower when the need the interest/bond matures vs what they are paying in that tax year and if they can afford to pay in that tax year.
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countrygirl2
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Post by countrygirl2 on Nov 22, 2023 18:21:40 GMT -5
It will be lower as they do not start maturing till 2031, some will likely go to son unless I need to cash them in for living expenses. I don't forsee it but one never knows.
We will likely sell our last rental next year so less income. Right now interest is offsetting the renal income but doubt that lasts. We will decide as time goes on.
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resolution
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Post by resolution on Dec 19, 2023 10:10:28 GMT -5
I just used my husband's Christmas bonus to buy 10k worth of ibonds at the current 1.3% fixed rate. I went ahead and sold my ibonds from last year, and once I receive the money will put it into the money market at Vanguard which is currently paying 5.3%.
It seems like interest rates will soon be on their way back down, so I am debating buying a longer term CD instead of just leaving the cash to sit in the money market account. I may wait until closer to May and put it back into ibonds, depending on what the projections for the next fixed rate look like. I really wish they publicized the new rates in advance.
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TheOtherMe
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Post by TheOtherMe on Dec 19, 2023 11:09:25 GMT -5
The only CDs I could find when mine matured that were over 5% are short term. Banks must be thinking rates will be going down.
I even checked online. I don't have enough money to get a higher interest rate.
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azucena
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Post by azucena on Dec 19, 2023 11:28:07 GMT -5
I just used my husband's Christmas bonus to buy 10k worth of ibonds at the current 1.3% fixed rate. I went ahead and sold my ibonds from last year, and once I receive the money will put it into the money market at Vanguard which is currently paying 5.3%. It seems like interest rates will soon be on their way back down, so I am debating buying a longer term CD instead of just leaving the cash to sit in the money market account. I may wait until closer to May and put it back into ibonds, depending on what the projections for the next fixed rate look like. I really wish they publicized the new rates in advance. Why did you put more in Ibonds when the rate is much lower than money market? Is it because you expect MM to go down soon? I'm getting ready to move some long term savings into a 2.5 yr CD with lcef at 6.25%. It's not FDIC insured but they support Lutheran church and school loans so incredibly stable. I've invested with them in the past. Just need to figure out our min US bank balance to maintain free banking. lcef.org/investment-rates/
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resolution
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Post by resolution on Dec 19, 2023 12:58:31 GMT -5
I just used my husband's Christmas bonus to buy 10k worth of ibonds at the current 1.3% fixed rate. I went ahead and sold my ibonds from last year, and once I receive the money will put it into the money market at Vanguard which is currently paying 5.3%. It seems like interest rates will soon be on their way back down, so I am debating buying a longer term CD instead of just leaving the cash to sit in the money market account. I may wait until closer to May and put it back into ibonds, depending on what the projections for the next fixed rate look like. I really wish they publicized the new rates in advance. Why did you put more in Ibonds when the rate is much lower than money market? Is it because you expect MM to go down soon? I'm getting ready to move some long term savings into a 2.5 yr CD with lcef at 6.25%. It's not FDIC insured but they support Lutheran church and school loans so incredibly stable. I've invested with them in the past. Just need to figure out our min US bank balance to maintain free banking. lcef.org/investment-rates/The new ibonds have 1.3% fixed and 3.97% variable, for a total of 5.27%. I bought them because in the future they might pay close to the current inflation rate plus 1.3%. My old ibonds that I cashed in didn't have the 1.3% fixed component, so they were making less than the new ones. I figured I would be better off moving them into something else. The lcef rate looks fantastic, but I think I am too risk averse to try it. Our local private and religious schools all took a huge hit from the pandemic, and enrollment rates haven't recovered. Our local Catholic high school is closing at the end of this school year, and our local Catholic Elementary is sending us a bunch of emails asking for donations to offset some of their losses. That may not be the case for the Lutheran schools, but I think I would feel anxious about it if I invested in them.
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azucena
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Post by azucena on Dec 19, 2023 13:12:53 GMT -5
Thanks for the response.
I'm still trying to decide my long term ibond strategy. I started them to chase the high interest rates and have currently decided to let them sit mostly bc I don't want to pay taxes on the interest when 2023 will be my highest income year so far. I had read about avoiding the taxes if you use them to pay for college tuition but then later learned that there is an income cap on that which I'm over. Definitely considering them tuition money though for my hs sophomore. Feels good to have them stashed risk-free earning a bit.
I hear you on being risk averse. I'll put in an amount that would hurt to use but not be catastrophic. StL is the home of the LCMS denomination home office and several of the larger churches and schools are expanding including ours. We opened a new school building in 2021 after raising $8M and borrowing $1M from lcef which has since been paid down to $450k. We will build a new gym, cafeteria, and fellowship space with ground breaking set for Aug 2024. Total cost estimated to be $15M of which $12M has been pledged over the next 5 yrs. Remainder will be a loan from lcef. LCMS campaign managers couldn't believe the fundraising turnout. Since the new building opened, we have increased enrollment from 125 to almost 200 K-8th.
I wouldn't want to tie up long term savings for more than the 2.5 yrs. Timing works out well for college tuition too, so will give me options.
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minnesotapaintlady
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Post by minnesotapaintlady on Dec 19, 2023 13:16:18 GMT -5
I just used my husband's Christmas bonus to buy 10k worth of ibonds at the current 1.3% fixed rate. I went ahead and sold my ibonds from last year, and once I receive the money will put it into the money market at Vanguard which is currently paying 5.3%. It seems like interest rates will soon be on their way back down, so I am debating buying a longer term CD instead of just leaving the cash to sit in the money market account. I may wait until closer to May and put it back into ibonds, depending on what the projections for the next fixed rate look like. I really wish they publicized the new rates in advance. Why did you put more in Ibonds when the rate is much lower than money market? Is it because you expect MM to go down soon? I'm getting ready to move some long term savings into a 2.5 yr CD with lcef at 6.25%. It's not FDIC insured but they support Lutheran church and school loans so incredibly stable. I've invested with them in the past. Just need to figure out our min US bank balance to maintain free banking. lcef.org/investment-rates/That 1.3% fixed above whatever the inflation rate is is pretty sweet. Wish I didn't have to do siding.
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resolution
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Post by resolution on Dec 19, 2023 13:22:16 GMT -5
I'm glad that your schools are doing well. I think it's an added plus if you know your money is going to support an institution that you believe in. There is a chart on the treasury site that shows what ibonds are earning based on the date of purchase. I thought it was interesting to see how the rates differed over time. www.treasurydirect.gov/files/savings-bonds/i-bond-rate-chart.pdf
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resolution
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Post by resolution on Dec 19, 2023 13:24:52 GMT -5
Why did you put more in Ibonds when the rate is much lower than money market? Is it because you expect MM to go down soon? I'm getting ready to move some long term savings into a 2.5 yr CD with lcef at 6.25%. It's not FDIC insured but they support Lutheran church and school loans so incredibly stable. I've invested with them in the past. Just need to figure out our min US bank balance to maintain free banking. lcef.org/investment-rates/That 1.3% fixed above whatever the inflation rate is is pretty sweet. Wish I didn't have to do siding. Your siding is 100% more important than ibonds!
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azucena
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Post by azucena on Dec 19, 2023 13:31:39 GMT -5
MPL - home maintenance is important esp in your climate.
Resolution - great chart. I'm leaning towards it doesn't make sense to move my old ibonds to new ones for <1% increase in overall interest rate. My time is too valuable.
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minnesotapaintlady
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Post by minnesotapaintlady on Dec 19, 2023 14:25:08 GMT -5
That 1.3% fixed above whatever the inflation rate is is pretty sweet. Wish I didn't have to do siding. Your siding is 100% more important than ibonds! But, but..maybe this will be the year a tornado takes the place out, or at least hail damaging the siding. Too late, already signed the contract so I'm committed now...unless the tornado comes before June/July.
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susana1954
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Post by susana1954 on Dec 19, 2023 15:25:28 GMT -5
But your total would be a lot less if you paid taxes annually and the rate would have been high as your husband was a high earner. No one ever wants to pay taxes but the important thing to do is to be strategic about it when you can. With ibonds a person should determine annually if their rate will be lower when the need the interest/bond matures vs what they are paying in that tax year and if they can afford to pay in that tax year. No, you can't determine annually. Once you decide to pay the interest each year, you must continue or file a special form. I will admit that I didn't understand the form. I do pay the interest annually, by the way.
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countrygirl2
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Post by countrygirl2 on Dec 19, 2023 23:09:16 GMT -5
I'm thinking of cashing some with no fixed rate and putting them in with the 1.3% fixed, might be worthwhile. We don't anticipate using this money but one never knows. Need to check and see what they are earning.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Jan 3, 2024 10:33:51 GMT -5
But your total would be a lot less if you paid taxes annually and the rate would have been high as your husband was a high earner. No one ever wants to pay taxes but the important thing to do is to be strategic about it when you can. With ibonds a person should determine annually if their rate will be lower when the need the interest/bond matures vs what they are paying in that tax year and if they can afford to pay in that tax year. No, you can't determine annually. Once you decide to pay the interest each year, you must continue or file a special form. I will admit that I didn't understand the form. I do pay the interest annually, by the way. good info! thanks. I will keep on not paying then for sure! Will wait till I need the money and then pay as will very likely be in a lower tax situation.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Jan 4, 2024 10:54:33 GMT -5
calling minnesotapaintladyhoping you can take out your ibonds crystal ball and help me with a decision....or maye just a strategy kind of thing. May not happen, but I'd like to max ibonds in 2024. Given where interest rates are going to go, I was thinking to try to get as much in before the next adjustment thinking that the fixed part isn't going to go up, and coud possibly go down. Wondered what your insight was?
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Artemis Windsong
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Post by Artemis Windsong on Jan 4, 2024 11:04:18 GMT -5
I asked chat GPT on whether to sell and Ibond with no fixed for the fixed plus. It said go for the fixed plus. I left the interest in the original bond and did a partial redemption that I will buy the fixed plus Ibond. That site is so clumsy but that's for another discussion.
I also asked about lcef. They said it's riskier because of no FDIC or treasury backing. I also overstimulated myself on the lcef site trying to fill out an app. It says on the entry page it could be weeks for help with questions. Also, IDK if religious affiliation figure into it or not.
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minnesotapaintlady
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Post by minnesotapaintlady on Jan 4, 2024 11:46:03 GMT -5
1.3% is the highest the fixed has been in almost 20 years. I'd probably wait until April at least. There is at least one Boglehead that has been very good at predicting the fixed rate lately (based on actual data, not just guessing). He may have "cracked the code".
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seriousthistime
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Post by seriousthistime on Jan 4, 2024 14:02:45 GMT -5
minnesotapaintlady, please post here when the Boglehead predicts which way is best. I'm in the same boat as Rukh, wondering which would be the best way to go.
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minnesotapaintlady
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Post by minnesotapaintlady on Jan 4, 2024 14:07:03 GMT -5
minnesotapaintlady , please post here when the Boglehead predicts which way is best. I'm in the same boat as Rukh, wondering which would be the best way to go. Maybe follow their thread. I have no horse in the race this year and am spending down all savings instead of adding more, so I haven't been keeping close tabs on it like before.
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seriousthistime
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Post by seriousthistime on Jan 4, 2024 14:15:14 GMT -5
Thank you for the link!
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Rukh O'Rorke
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Post by Rukh O'Rorke on Jan 4, 2024 22:53:56 GMT -5
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countrygirl2
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Post by countrygirl2 on Jan 7, 2024 20:32:44 GMT -5
Be careful with the church investments. A few years ago we had a family that was investing in churches all over. Everyone around home was investing with them, some put all their money in it. You know all the church people are so pure of heart and honest. Turns out it was a huge ponzi scheme. It worked for years while he kept more money coming in, than the churches fell on hard times. This was pre covid too. My FIL was going to put all his in it. I told him be careful, when something seems to good to be true it is. So he didn't. Some people lost everything, absolutely ever thing, they finally sold his multi million dollar house, lake, property with pavilions and more and got some money back to pay investors, but I doubt any of them were ever made whole again. It was very sad as so many were old and needed it. I hate to say it but when I see christian affiliated with investments, I run not walk far away. But that is just me, seen this too many times.
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Artemis Windsong
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Post by Artemis Windsong on Jan 7, 2024 20:59:40 GMT -5
Thanks countrygirl2. I'm staying with some assurance of FDIC or treasury.
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seriousthistime
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Post by seriousthistime on Jan 19, 2024 12:03:00 GMT -5
Anyone have any suggestions for any banks/brokers who have good rates on 1-year CDs? I just had a CD mature, and I want to roll that money back into CDs but want to split it into a few CDs for smaller amounts so, IF I need to tap into it (I don't expect to need to, but you never know), I don't have to pay an early withdrawal penalty for the whole thing and can just cash in one or two of them.
Capital One seems to be paying 5.0% for a one-year CD. I've seen some others. Mostly I'd like to stick with banking names I recognize. Some of the places I've seen online are not names I'd recognize, although they say they are FDIC insured.
Open to suggestions...
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minnesotapaintlady
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Post by minnesotapaintlady on Jan 19, 2024 12:16:19 GMT -5
Anyone have any suggestions for any banks/brokers who have good rates on 1-year CDs? Do you have a Fidelity account where you can just pick from brokered CDs? Otherwise, this one looks pretty good.
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seriousthistime
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Post by seriousthistime on Jan 19, 2024 12:48:20 GMT -5
I do have a Fidelity account. I was confused about their brokered CDs vs. Fractional CDs (are they just for amounts below $1K?) so I didn't look further. How does that work? Do they list CDs to choose from at different banks, etc., or do you just deposit the money into something called a brokered CD in your Fidelity account and they take care of choosing the bank and the doing the leg work?
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minnesotapaintlady
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Post by minnesotapaintlady on Jan 19, 2024 13:01:39 GMT -5
I've never done a fractional CD, but yeah, those let you buy in increments of $100 instead of $1000. Most don't allow you to do that, but if you look at the list of available brokered CD's some will have a "yes" in the fractional shares column.
Right now, the highest I'm seeing for 12 month is Chase. There's also an 11 month Chase CD at 5.15%.
Just keep in mind that if you buy brokered CDs when you look at your account it can appear that the value is dropping which it will do if the rates are going up. You are still guaranteed your principal and your rate if you hold it to maturity.
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