I Bonds, anyone?

[Rukh O'Rorke]

May 29, 2021 15:25:01 GMT -5 djAdvocate said:

May 24, 2021 13:24:38 GMT -5 Rukh O'Rorke said:

so I did read a TIPS vs I-bond comparison on the treasury direct site. TIPS are more liquid, and you are on the secondary marketplace so even more so.

Was liquidity your only motivator? Or is there anything else that swayed you on TIPS vs I-bonds?

I like the behavior of these bonds in inflationary markets.

I also owned some TLT, and this behaved VERY POORLY every time

the market reacted to changes in inflation/interest rates.

so, I just kind of developed a distaste for standard issue treasuries over time.

I've never had a good experience with bonds. Not that I've done a lot with them, always focused on growth - but recognizing that I need a little something more secure as I get closer to pulling the plug and retire or semi-retire. 

Bonds seem useless to me if they actually lose value off purchase/face price. still - I might take a look at tips. Might be a fund in my current 401k account. I've looked there before but always keep in 100% stocks.

Found this on tips:

www.investopedia.com/articles/investing/102215/3-reasons-stay-away-tips.asp

TIPS frequently underperform traditional Treasuries, particularly when deflation becomes an issue.

TIPS rely on the CPI, which may understate inflation for potential TIPS investors because these investors tend to be older and less likely to switch to new goods.

TIPS are considerably more volatile than cash, especially during stock market crashes.

I-bonds would likely also suffer if deflation were to occur. but would keep face value I think.

Everything is a risk it seems! One way or another.

[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 really love these ibonds! 

why they so stingy with only 10k a year? I know you can do an extra 5k at tax time, but I'd love to scoop up about 100k and call me secured.....

noot only you can't get the money in there - then you need to let it percolate before you can get it, so the delay in getting in there compounds itself.

[minnesotapaintlady]

Aug 7, 2021 12:57:50 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 really love these ibonds! 

Me too.  I wish I would have started putting money in them a long time ago.  

I have way too many lofty financial goals now.  Pay off the mortgage, max the 401K, max the IRA, max the HSA, Carrot's 529...and now I think I need to do 10K/year into the I bonds too.   I really can't do all of that on what I bring in, so need to decide what is the most important. 

[Rukh O'Rorke]

Aug 7, 2021 21:46:01 GMT -5 minnesotapaintlady said:

Aug 7, 2021 12:57:50 GMT -5 Rukh O'Rorke said:

I really love these ibonds! 

Me too.  I wish I would have started putting money in them a long time ago.  

I have way too many lofty financial goals now.  Pay off the mortgage, max the 401K, max the IRA, max the HSA, Carrot's 529...and now I think I need to do 10K/year into the I bonds too.   I really can't do all of that on what I bring in, so need to decide what is the most important. 

I know!

so many goals, never enough money or time. After years and years of not being able to max retirement accounts I'm finally able to, but likely can't stay in the game very much longer.

if it's not one thing, it's another....

[countrygirl2]

I put $60k in I bonds years ago and now worth $130k. I quit buying because the CPI had been low. They have 2 components a fixed rate and the flexible part. However, they are a long term investments, these run 30 years. Unless we have a dire cash need they will likely go to our son and family. You can cash them in, but I'm not.

Poor DD fell this morning again, she hit her head on her glasses and broke them and cut above her brow. It bled and bled and was just as I was leaving for the heart doc. I washed her off and made sure nothing was broken as her arm was hurting too. Hubs finished and fed her plus cleaned her off.

I made a neurologist appointment for January!! So I'm trying at another to see if we can get her in sooner, that's no good. And they need a referral, so had to go back to her primary, jeez.

[minnesotapaintlady]

Aug 7, 2021 22:41:33 GMT -5 Rukh O'Rorke said:

Aug 7, 2021 21:46:01 GMT -5 minnesotapaintlady said:

Me too.  I wish I would have started putting money in them a long time ago.  

I have way too many lofty financial goals now.  Pay off the mortgage, max the 401K, max the IRA, max the HSA, Carrot's 529...and now I think I need to do 10K/year into the I bonds too.   I really can't do all of that on what I bring in, so need to decide what is the most important. 

I know!

so many goals, never enough money or time. After years and years of not being able to max retirement accounts I'm finally able to, but likely can't stay in the game very much longer.

if it's not one thing, it's another....

And I hear the 401K limit is going up to $20,500 in 2022.  I think this year will be the last I max it.

I'm also ALMOST to the point of accepting stopping the mortgage prepayment...which kills me. I refinanced last October and have paid off 5 years of the 30 year loan in 10 months.  My goal was to pay it off in 6.5 years, but that's just not possible without reducing tax-preferred savings.  The only way I've been able to pull it off the past year is by using savings which was boosted by all the stimulus checks.

I don't know.  I'll change my mind 100 times before the September payment is due.

[CCL]

Don't worry about paying your house off. You've got a great rate. Those retirement accounts are where the $$$ are.

[nittanycheme]

I have some I-Bonds.  I've slowly been putting the money I got from my mom's estate into them.  She was pretty conservative, and never had a lot of money, so I feel like something like that is honoring her memory - and pretty much all of the rest of my money is in stocks, so its a good balance.  

[Rukh O'Rorke]

just checked mine, first qrt iterest hit 

[minnesotapaintlady]

Sept 1, 2021 15:00:36 GMT -5 Rukh O'Rorke said:

just checked mine, first qrt iterest hit 

First qrt?  I bonds only pay out every 6 months right?

[Rukh O'Rorke]

Sept 6, 2021 10:56:14 GMT -5 minnesotapaintlady said:

Sept 1, 2021 15:00:36 GMT -5 Rukh O'Rorke said:

just checked mine, first qrt iterest hit 

First qrt?  I bonds only pay out every 6 months right?

Oh! Well I got some!

[minnesotapaintlady]

Sept 6, 2021 21:45:51 GMT -5 Rukh O'Rorke said:

Sept 6, 2021 10:56:14 GMT -5 minnesotapaintlady said:

First qrt?  I bonds only pay out every 6 months right?

Oh! Well I got some! [img src="https://i239.photobucket.com/albums/ff155/JiminiChristmas/ymamsmiles/wink.png" class="smile" src="//storage.proboards.com/forum/images/smiley/wink.png" alt=""]

I went and checked mine too and there is interest added on the bond I bought in May, but it looks to be what would only be about 1 months worth, so I obviously have no idea how it works.

[Tiny]

I set up another purchase of Ibonds (I've committed to moving a small chunk of my EF to them) and I see that the Ibonds I bought in May have interest. The one's I bought in July do not.

I know my May, July and Sept bond purchases will get 6 months of interest at the current rate.

But now I'm wondering if only the original purchase amount gets interest or if the interest gets interest too...

I have some "converted paper bonds" and they are stored in another page - so I can't see my Ibonds and my old converted paper EE bonds totals on the same page.

The TD site is clunky - but it does the job.  And I have to admit it's chock full of information.

[countrygirl2]

I thought I bond purchases were limited to $30k a year, has that been changed?

[minnesotapaintlady]

Sept 8, 2021 10:23:31 GMT -5 countrygirl2 said:

I thought I bond purchases were limited to $30k a year, has that been changed?

The limit is 10K/year.  15K if you also do the 5K in paper bonds with your tax refund.  Of course, if you're married this all totals to 30K. 

[Artemis Windsong]

"with your tax refund" knocks a lot of us out of that purchase.

[minnesotapaintlady]

Sept 8, 2021 11:23:43 GMT -5 Artemis Windsong said:

"with your tax refund" knocks a lot of us out of that purchase.

Can't you just make an estimated tax payment so you overpay and get a refund?

[Rukh O'Rorke]

Sept 8, 2021 12:02:51 GMT -5 minnesotapaintlady said:

Sept 8, 2021 11:23:43 GMT -5 Artemis Windsong said:

"with your tax refund" knocks a lot of us out of that purchase.

Can't you just make an estimated tax payment so you overpay and get a refund?

Do you have to overpay to do this? Can’t write a check to up it to 5k?

[minnesotapaintlady]

Sept 8, 2021 13:22:44 GMT -5 Rukh O'Rorke said:

Sept 8, 2021 12:02:51 GMT -5 minnesotapaintlady said:

Can't you just make an estimated tax payment so you overpay and get a refund?

Do you have to overpay to do this? Can’t write a check to up it to 5k?

No.  You aren't allowed to just buy 5K more when you file your taxes, it is just a way to receive a refund if you have one coming.

Also, that 5K is only issued in paper bonds.  Which is a little weird.  I heard you can convert them to electronic after the fact if you want to.

[countrygirl2]

Mine are all paper, prefer that.

Refund, that's a nice dream, we pay.

[minnesotapaintlady]

You can't get paper bonds anymore except for the 5K from tax refunds.  And anyone can get a refund if they just pay in more than they owe.

[Rukh O'Rorke]

Sept 8, 2021 16:17:48 GMT -5 minnesotapaintlady said:

You can't get paper bonds anymore except for the 5K from tax refunds.  And anyone can get a refund if they just pay in more than they owe.

yeppers!

[CCL]

How much interest are these bonds paying now anyway?

[minnesotapaintlady]

Sept 8, 2021 18:34:33 GMT -5 CCL said:

How much interest are these bonds paying now anyway?

3.54%

[Tiny]

::sigh:: I've reached the point where there are more places to save/invest income than I have income to save/invest... especially since it looks like the contribution limits on tax differed/advantaged accounts will go up in 2022.

It's looking like 2021 is the last year I will be able to max them all.   

When I started out on the "contribute the max to "retirement accounts" journey"  it felt like one of those things you achieve and then never think about again.  But it wasn't.  The milestone kept moving. 

[plugginaway22]

Thank you all, finally had time to read up on these and just pulled the trigger on 10k, and will buy another 10k in January. Our cash stash is high since we plan to live off of it for a few years, so this feels a bit better. DH will do the same.

[Tiny]

www.mymoneyblog.com/savings-i-bonds-november-2021-interest-rate.html

(As previewed back in September, inflation has been ticking up and the new annualized rate on Series I bonds will be over 7%. Inflation-linked bonds do well when inflation is higher than expected, which is currently the case. Every single I bond will earn this rate eventually for 6 months, depending on the initial purchase month. The usual full semi-annual update is below.)

I have been meaning to return to this topic. It looks like my decision to "tie up" part of my EF in I-Bonds is not gonna be a bad idea. I've bought 8K in 2021 (so six months at 3.54% and then 6 months at 7%.

I will probably buy another 2K in January 2022 and then another 5K at the end of February 2022... I have that in a CD earning .25% I will still have 15K in my "cash" EF.

I'm going to 'speculate' that the inflation rate won't stay high for very long... so I'm expecting that once the rates drop down again I will see if I want to keep the money in I-Bonds (I will wait the 12 months - and then maybe 3 months at the lower interest (so that's the interest I lose)... I think it works that way....)

Pluggingaway22 - I think you could buy 10K now and your DH could by 10K now - and then in January you could do it again - if you are really cash heavy/high.

[susana1954]

If you plan on keeping them long-term, consider claiming the interest yearly on your federal income tax.  It's pretty minimal that way, and you don't get hit with a hefty tax hit when you do decided to cash them in.  When you do claim the interest yearly, you must continue doing it that way.

[minnesotapaintlady]

I need to study up on these a little more.  I'm seeing a lot of people on Bogleheads choosing to buy their bonds now instead of waiting until November stating that they will get the 7+ % regardless, but this gets them 6 months of 3.54% first and then 6 months at 7%.  I guess I always thought you just got the rate it was the month you bought them, then when it changed your rate changed?  So, if you bought in Oct you would get one month at 3.54 and then it would start at 7. 

So, does that mean you get the current rate for 6 months no matter when you bought in the 6 month time frame? 

Very confusing.

eta:  Ok, I took 10 minutes to read the Wiki.   The fixed rate works like I thought and is based on the date you bought it, but the inflationary rate lags by up to 6 months depending on when purchased so buying in April or October does get you 6 month of 3.54 and then 6 months of whatever rate is announced in November.

www.bogleheads.org/wiki/I_savings_bonds

[Rukh O'Rorke]

Too much for me to read on the boggleheads ! Thanks for the update mpl!